Additional Resources

  1. California Estate Planning []
  2. How Investment Decisions Affect Life Income Gifts []
  3. Charitable Remainder Trusts And Charitable Annuities As Estate ... []
  4. Types Of Charitable Remainder Trusts []


A charitable trust is an irrevocable trust established for charitable purposes, and is a more specific term than "charitable organization".

Charitable Remainder Trust

A Charitable Remainder Trust is an irretrievable donation which generates a potential flow of income for its receivers and a large tax break for their heirs. Charitable Remainder Trust pertains to individuals who are willing to donate their assets, belongings and properties to charity in return for a guarantee that their heirs would be entitled to significant tax cut. In this case, the charity acts as a trustee and can decide where to invest the donor’s assets and property. The donor then receives a predetermined share of the profits for a stipulated time period, usually a life time, at the end of which, the property is permanently granted to charity, and cannot be taken back.

The main purpose of Charitable Remainder Trust is to cut down the imposition of taxes from individuals. This can encourage people to donate more assets to the Trust in hopes of tax reduction. The Trust can offer reductions on:

  • Income tax
  • Capital gains tax
  • Estate tax
  • Payroll tax

Forms of Charitable Remainder Trusts

There are two basic types of Charitable Remainder Trust.

  • Charitable Remainder Annuity Trust (CRAT)
  • Charitable Remainder Uni Trust (CRUT)

The primary difference between these two forms of trusts is the nature of income they generate for individual donors. CRAT recipients receive a fixed amount of money each year which can either be a predetermined figure paid in the local currency or a certain percentage of the value of the assets that had been initially funded. On the other hand, CRUT recipients are entitled to receive a share of the profits from the investment. The amount received therefore, varies per year.

While older donors prefer the certainty of the Annuity Trust, younger donors are attracted towards the Uni Trust as it has a greater potential for growth and profits. In addition, the Uni trust also takes into account the factor of inflation. The nature of the donated assets or properties can also influence the selection of the type of Remainder Trust. Real estate property is more likely to be donated to a Charitable Uni Trust rather than the Annuity Trust.

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