Charitable Trusts

First, you donate cash, stocks, real estate or other assets into an irrevocable trust. This can be done while you’re alive, or be carried out after you’ve died. Similar to other charitable donations, if funded while you’re alive, this may qualify you for a partial tax deduction that year. If you fund the trust with appreciated assets, the Foundation will sell the assets at market value, without incurring the capital gains tax you’d pay if you sold them yourself. That means the full market value of your assets can be invested into your trust.

Second, you determine who will receive income from the trust. The beneficiary can be yourself (if the trust is funded while you’re alive), an heir, or multiple beneficiaries. The amount of income is determined as a percentage of the trust’s value and can last for the lifetime of the beneficiaries, or for a specified term of years. CRT income payments are typically taxable.

Finally, after the specified term of years, or after the death of all beneficiaries, the remaining value of the charitable remainder trust is distributed to the ministry or ministries you chose when you established the trust.

Charitable remainder annuity trusts (CRATs) pay a fixed dollar amount each year (much like a basic annuity). You can’t make additional contributions to a CRAT after it’s established. 

Charitable remainder unitrusts (CRUTs) pay an amount equal to a fixed percentage of the trust’s value at the beginning of each year. CRUTs do allow donors to make additional contributions to the trust after it’s established.