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Charitable remainder trust (CRT)
Since 1969· Legal document or tool
Depends on youExperts differ; the right answer depends on your situation.
An irrevocable trust that pays you income for life or up to 20 years, then gives what remains to charity.
See it on the Personal Finance & Estate map →How it works
You transfer an appreciated asset; the trust, being tax-exempt, can sell it without immediate capital-gains tax and reinvest the full amount. It pays you a fixed dollar amount (annuity trust) or a fixed percentage of its value (unitrust), between 5% and 50% a year. You get a partial income-tax deduction now, and payouts are taxed as received. Charity's projected share must be at least 10%. Heirs get less unless paired with life insurance. Mortgaged real estate is tricky; ask your CPA and attorney.
Why it matters for you
Depends on you. For a charitably inclined owner of a highly appreciated building, it can turn a big taxable sale into lifetime income, but the charity's share is gone for good.
Think of it like
Like a seller-financed sale to a charity: you collect installments for life, and the charity keeps what's left.
Rules, limits and sources (2026)
Created by the Tax Reform Act of 1969 under IRC Sec. 664; trusts file IRS Form 5227 yearly, and the IRS has moved to flag certain abusive annuity-trust schemes as listed transactions.
Watch out for
Whether a CRT beats simply selling, paying tax and giving later depends on rates, lifespan and payout; projections vary widely.
Connections (2)
▸Charitable remainder trust (CRT) is a type of Irrevocable trustStandard practice
How they connect
A CRT is an irrevocable trust split between you and charity: you take the income stream, the charity takes the remainder. Because the trust is tax-exempt, it can sell appreciated property without immediate tax. Once funded, you can't take the principal back, though you can usually change which charity receives it.
When it applies
Set up by donors with highly appreciated stock or real estate, often before a planned sale, with an estate attorney and CPA.
How sure?
IRC Sec. 664 and Treasury regulations define charitable remainder annuity and unitrusts; each trust files Form 5227 every year.
Watch out for
Whether a trust can safely hold mortgaged real estate, or sell after a deal is already agreed, is technical; timing errors can trigger tax.
▸Charitable remainder trust (CRT) defers and spreads Capital gains tax (short- vs. long-term)Depends on you
How they connect
You give an appreciated building or stock to a CRT, which is tax-exempt, so it can sell without paying capital-gains tax up front. You receive a yearly payout, 5–50% of value, for life or up to 20 years, and the gain is taxed gradually as payouts come out. Charity gets what's left; heirs don't.
When it applies
Created by the Tax Reform Act of 1969; widely used for appreciated real estate and stock since the 1980s.
How sure?
IRC Sec. 664 and its four-tier ordering rules; IRS Form 5227 and trust K-1s track gain as it is distributed.
Watch out for
Whether a CRT beats simply selling depends on age, rates and charitable intent; mortgaged property complicates it. Ask your CPA.