Learning Center


Give and Receive with a Charitable Remainder Trust

Scientific research suggests it really is better to give than to receive — that spending money for the benefit of others may lead to longer-lasting happiness than spending money on yourself.1 However, by structuring a donation using a charitable remainder trust (CRT), you might have the best of both worlds: a substantial gift to your favorite charity and a flow of income during your lifetime.

To understand the potential benefits of a CRT, consider what would typically occur if you sold assets, such as securities or property, in order to give the proceeds to a charitable organization. In most cases, you would incur capital gains taxes on any appreciation in asset value, which would reduce the value of your charitable contribution (if you paid the taxes out of the proceeds) or require an out-of-pocket expenditure. Although you might receive an income tax deduction in the year of your donation, you would receive no further financial benefit from the contribution.

An infographic showing the process for donating to a charitable remainder trust

A Strategic Approach

With a CRT, you donate by first placing the assets in the trust. In addition to naming the charitable organization as the first beneficiary, you can designate an income beneficiary — yourself or anyone else you choose — to receive specified payments from the trust for a set term of up to 20 years or for your lifetime (or the lifetime of your surviving spouse or designated beneficiary). Income payments must be made at least once a year and may be fixed or variable depending on the type of CRT you use. Upon your death (or the death of your surviving spouse or designated beneficiary), the assets in the trust go to the charity.

After the assets are transferred to the charitable trust, the trustee may sell them and reinvest the proceeds in income-producing assets without incurring capital gains taxes. This maintains the full asset value to fund your specified income and could increase the ultimate value of the gift to the charity.

Although the annual trust income is usually taxable, you may qualify for an income tax deduction based on the estimated present value of the remainder interest that will eventually go to the charity.

Types of CRTs

A CRT can be an inter vivos (living) trust funded during your lifetime or a testamentary trust funded at your death for the benefit of your heirs. In either case, there are two basic types of CRTs, with significant differences in the payment structure.

A charitable remainder annuity trust (CRAT) pays a fixed percentage of the trust’s initial value to the donor (or selected beneficiary) each year. A charitable remainder unitrust (CRUT) pays a set percentage of the trust’s annual fair market value to the donor (or selected beneficiary) as income each year. The appropriate structure depends on your personal preference and situation, including your age, risk tolerance, and income needs, as well as the type of asset.

A Win-Win Proposition

A CRT could be a win-win proposition for you and your favorite charity. However, it’s important to remember that a CRT is an irrevocable trust. Once you’ve made your decision, you cannot change your mind.

While trusts offer numerous advantages, they incur up-front costs and often have ongoing administrative fees. The use of trusts involves a complex web of tax rules and regulations. You should consider the counsel of experienced estate planning, legal, and tax professionals before implementing such strategies.


Information provided has been prepared from Broadridge Advisor Solutions sources and data we believe to be accurate, but we make no representation as to its accuracy or completeness. Data and information is provided for informational purposes only, and is not intended for solicitation or trading purposes. Broadridge Advisor Solutions is not an affiliate of Equitable Advisors, LLC. Please consult your tax and legal advisors regarding your individual situation. Neither Equitable Advisors nor any of the data provided by Equitable Advisors or its content providers, such as Broadridge Advisor Solutions, shall be liable for any errors or delays in the content, or for the actions taken in reliance therein. By accessing the Equitable Advisors website, a user agrees to abide by the terms and conditions of the site including not redistributing the information found therein.

Securities offered through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA, SIPC. Annuity and insurance products offered through Equitable Network, LLC and its subsidiaries.

Securities offered through Equitable Advisors, LLC (212-314-4600), member FINRA/SIPC. Investment advisory products and services offered through Equitable Advisors, LLC, an investment advisor registered with the SEC. Annuity and insurance products offered through Equitable Network, LLC and its insurance agency subsidiaries. Equitable Network, LLC does business in California as Equitable Network Insurance Agency of California, LLC and, in Utah, Equitable Network Insurance Agency of Utah, LLC. Equitable Advisors and its affiliates do not provide tax or legal advice. Individuals may transact business and/or respond to inquiries only in state(s) in which they are properly registered and/or licensed. The information in this web site is not investment or securities advice and does not constitute an offer.

Equitable Advisors, LLC is an Equal Opportunity Employer M/F/D/V

IMPORTANT: The names of all companies under the formerly-used AXA brand name have been updated under Equitable, the brand name of Equitable Holdings, Inc. and its family of companies. As we work to completely revise all of our website content, advertising, and other communications, you may occasionally see a remaining and inadvertent reference to some variation of "AXA", which should be disregarded and will be corrected as soon as possible.

Link to equitable.com

Privacy Policy

Check the background of this financial professional on FINRA's BrokerCheck
Check the background of this financial professional on FINRA's BrokerCheck