Charitable Remainder Trusts – Simple Guide for Giving and Saving

Ever wondered how you can keep receiving money from an asset while still helping a charity? A charitable remainder trust (CRT) lets you do just that. You place cash, stocks, or property into the trust, keep getting an income stream for a set period, and when that time ends, the leftovers go to the charity you choose. It’s a win‑win for your finances and the cause you care about.

How a Charitable Remainder Trust Works

First, you transfer the asset into the trust. The trust then invests it, usually in a mix of bonds and stocks that match your need for steady income. Each year you receive a payment – either a fixed amount (CRUT) or a percentage of the trust’s value (CRAT). Those payments are taxed only on the earnings part, which often means lower tax bills. After the trust term—either a set number of years or your lifetime—the remaining funds are handed over to the charity you named.

The tax break comes right away. When you fund the CRT, the IRS treats the charitable portion as a donation, letting you claim a charitable deduction on your current tax return. The deduction is based on the present value of the future gift to the charity, calculated using IRS tables. This can shrink your taxable income for the year you fund the trust.

Steps to Set Up Your Own Trust

1. Pick a Charity. Choose a cause that matters to you—maybe your local parish, a health charity, or an environmental group. You can even name more than one.

2. Decide on the Trust Type. A CRUT pays a percentage of the trust’s value each year, which can grow or shrink. A CRAT pays a fixed dollar amount, which stays the same regardless of market swings. Pick the one that fits your cash‑flow needs.

3. Choose the Term. You can set the trust to last for up to 20 years or for your lifetime. Longer terms usually increase the charitable deduction because more money stays in the trust for the charity.

4. Gather Your Assets. Cash, publicly traded securities, or real estate are common choices. Real estate can be a smart move if you want to avoid capital gains tax on a sale, but it may need appraisal and a bit more work.

5. Hire Professionals. A qualified attorney drafts the trust document, and a financial advisor helps pick investments that match your income goal. A tax professional will calculate the deduction and make sure you meet IRS rules.

6. Fund the Trust. Transfer the chosen assets into the trust. The trust becomes the legal owner, and you start receiving the income payments as scheduled.

7. Keep Records. Every year you’ll get a Form 1099‑R showing how much you received and how much is taxable. Your tax return will also include Schedule A for the charitable deduction.

Setting up a CRT can feel like a big step, but once it’s in place, you get a reliable income stream, immediate tax savings, and the satisfaction of knowing your leftovers will support a good cause. If you’re already involved in community work—like volunteering at Holy Family Catholic Church in Patchway—adding a CRT to your giving plan can amplify the impact you already make.

Ready to start? Talk to a local estate planner or your parish’s financial advisor. They can walk you through the paperwork and help you pick the right trust type for your goals. A charitable remainder trust isn’t just for the ultra‑wealthy; it’s a practical tool anyone who wants to give back while securing their own financial future can use.

Gareth Sheffield

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