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Charitable Remainder Trusts: An Educational Overview of Key Features

  • Parkview Partners Capital Management
  • 18 minutes ago
  • 3 min read

Understanding the Purpose of a Charitable Remainder Trust (CRT)


A Charitable Remainder Trust (CRT) is an irrevocable trust structure that provides income to designated individuals for a defined period, with remaining assets ultimately distributed to charitable organizations. This type of trust can be used to combine philanthropic interests with long-term financial and estate planning considerations.


By transferring assets into a CRT, donors may support charitable causes while structuring a future income stream for themselves or other beneficiaries. The approach may also help organize complex planning objectives such as tax considerations, diversification, or long-term legacy planning.


1. Potential Features of a CRT


While results depend on individual circumstances, CRTs are designed to offer several possible structural benefits:


  • Income Stream: A CRT may provide regular payments to one or more beneficiaries for life or a set number of years.

  • Charitable Remainder: After the income term ends, remaining trust assets are distributed to designated charitable organizations.

  • Asset Diversification: Assets contributed to the trust can be managed within a diversified portfolio.

  • Tax-Related Considerations: Depending on timing and circumstances, CRTs may offer certain tax-related advantages when assets are transferred.


These structural elements make CRTs a flexible tool for combining charitable giving with long-term planning.


A person in a suit places a financial document into an open safe with 'DEFER GAINS' written on it.

2. Using Appreciated Assets Within a CRT


Individuals often consider funding a CRT with appreciated assets such as securities or real estate. Once assets are transferred to the trust, the trustee may sell and reinvest them within the trust structure.


Common considerations include:


  • Identifying assets appropriate for contribution

  • Understanding how reinvestment may support income needs

  • Reviewing potential tax implications with qualified professionals

  • Aligning charitable goals with the trust’s long-term purpose


A thoughtful evaluation helps determine whether transferring specific assets into a CRT may support broader planning objectives.


3. Income Payment Structures


CRTs generally follow one of two common formats:


  • Charitable Remainder Annuity Trust (CRAT): Provides fixed payments based on the initial contribution amount.

  • Charitable Remainder Unitrust (CRUT): Provides variable payments based on a fixed percentage of the trust’s annual value.


Choosing between these structures often depends on factors such as income needs, market considerations, and long-term planning preferences.


Lifetime Income Stream with Charitable Benefit

4. Estate and Legacy Considerations


Because CRTs are irrevocable, assets placed in the trust may be removed from the taxable estate. This can support certain estate planning goals, particularly for individuals interested in combining wealth transfer planning with charitable impact.


When integrated into a broader strategy, CRTs may be used alongside other tools—such as life insurance trusts, donor-advised funds, or traditional estate planning documents—to support a long-term legacy framework.


Estate Tax Reduction and Wealth Transfer Planning

5. Administrative and Professional Support


Implementing a CRT requires legal documentation and ongoing trust administration. Donors typically work with estate planning attorneys, tax professionals, and investment managers to structure and maintain the trust in alignment with their goals.


Professional guidance may include:


  • Drafting and reviewing legal documents

  • Ensuring compliance with trust requirements

  • Managing trust assets and investment policies

  • Coordinating charitable distributions at the end of the term


This multidisciplinary support helps ensure the trust functions as intended.


Conclusion


A charitable remainder trust can be a versatile planning tool that blends charitable intent with long-term financial organization. By providing an income stream to beneficiaries and directing remaining assets to charity, a CRT may support both personal and philanthropic objectives. Evaluating its structure in the context of a broader plan can help determine whether it aligns with individual goals.



Investment advice offered through Stratos Wealth Partners, Ltd., a registered investment advisor. Stratos Wealth Partners, Ltd and Parkview Partners Capital Management are separate entities. Neither Stratos nor Parkview Partners Capital Management provides legal or tax advice. Please consult legal or tax professionals for specific information regarding your individual situation. Investing involves risk, including possible loss of principal. The information presented is for educational purposes only and should not be interpreted as individualized investment, tax, or legal advice. Past performance is not indicative of future results. For more information, please review our Form ADV, available upon request.


 
 
 

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Financial Advisor, Investment Advisor, High Net Worth, Wealth Management, Tax Planning, Risk Management, Financial Coordination, Retirement Planning, Charitable Giving, Columbus Ohio, Parkview Partners Capital Management

291 East Livingston Ave.
Columbus, OH 43215


Phone: (614) 427-2132

Fax: (614) 427-2132

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