Charitable Remainder Trusts, an Introduction

Some givers face a real tension. They want to make a significant gift to their church or a ministry they love, but they also need the value of an asset to help support them for the rest of their lives. Giving it away today does not work. Waiting until death feels too far off.

A charitable remainder trust is one way people have tried to hold both. This article is an introduction, not a recommendation. A CRT is a legal structure with lasting consequences, and it belongs in a conversation with your attorney and CPA.

The Basic Idea

You transfer an asset, such as appreciated stock or real estate, into an irrevocable trust. The trust pays you, or you and your spouse, a stream of payments for life or for a set term of up to 20 years. When the term ends, whatever is left in the trust goes to one or more charities you named.

The name tells the story. You keep the payments. Charity receives the remainder.

Two Main Types

Most charitable remainder trusts come in one of two forms.

1. 1

   Annuity Trust

   Pays a fixed dollar amount each year, set when the trust is created. It generally cannot accept additional gifts later.

2. 2

   Unitrust

   Pays a fixed percentage of the trust’s value, revalued each year, so payments can rise or fall. It can generally accept additional gifts.

In both types, the payout rate is generally at least 5% and no more than 50% of the trust's value each year, and the projected remainder for charity generally must be worth at least 10% of what you put in. Those rules shape what a trust can look like, which is one reason a professional needs to design it.

How the Tax Rules Generally Work

This is where a CRT gets technical. In broad strokes, if you itemize:

• You may generally take a partial charitable deduction when you fund the trust, based on the present value of what charity is projected to receive, subject to the usual AGI limits.
• The trust itself is generally exempt from income tax, so an appreciated asset can often be sold inside the trust without immediate capital gains tax.
• Payments to you are generally taxable, following an ordering system that treats income and gains in the trust as paid out first.
• The trust files its own annual return, and the rules on how it is managed are strict.

For 2026, a 0.5%-of-AGI floor applies to itemized charitable gifts, and the deduction value is capped at 35% for the top bracket. How any of this applies depends on your full return.

One honest reminder: giving always costs you more than it saves. A deduction lowers your tax by a fraction of the gift, never the whole gift. Give because you want the money to do good, and let the tax rules help that generosity go further.

What It Costs and Asks of You

A charitable remainder trust is not a form you fill out online. It generally requires an attorney to draft, a trustee to manage it, annual tax filings, and often appraisals for noncash assets. Those costs are real, and for smaller gifts they can outweigh the benefits.

It is also irrevocable. Once the asset is in the trust, you cannot take it back or change the charitable remainder away from charity. That permanence is part of what makes it a gift.

Questions to Bring to Your Attorney and CPA

If a CRT sounds worth exploring, these questions help you have a productive first meeting.

• Does the size of this gift justify the setup and ongoing costs?
• Which asset makes sense to contribute, and is a sale already in motion?
• Should payments run for our lives or for a fixed term?
• Which charities should receive the remainder, and are they eligible? Some donor-advised fund sponsors allow a fund to be named, depending on policy.
• How would a CRT fit with our wills, beneficiary designations, and the needs of our family?

Keep the Heart in the Plan

Complex giving tools can make generosity feel like a financial transaction. A CRT is a legitimate structure, but it is not the only faithful path, and for most families it is not the right one. Many people give simply and generously for a lifetime without ever touching a trust.

If you do explore one, keep the charity at the center of the conversation. The goal is not a clever structure. It is a gift that reaches good work, given in a way that also cares responsibly for your family.