charitable remainder trust
A trust providing income to the donor during lifetime with the remainder going to charity at death.
Example
“The charitable remainder trust provided $40,000 annually during retirement with the remainder to the university.”
Memory Tip
CRT — income now, charity later. Tax deduction today, legacy forever.
Why It Matters
A charitable remainder trust helps people balance personal financial security with charitable giving by allowing you to receive steady income while supporting causes you care about. This strategy can provide significant tax benefits and help reduce estate taxes, making it valuable for those with substantial assets who want to leave a lasting charitable legacy.
Common Misconception
Many people mistakenly believe they lose access to their money entirely when setting up a charitable remainder trust. In reality, you continue to receive regular income payments during your lifetime, and only the remaining assets transfer to charity after you pass away, giving you the best of both worlds.
In Practice
Suppose Sarah has $500,000 in appreciated stock that generates little income. She establishes a charitable remainder trust, transfers the stock, and receives $25,000 annually for life based on a 5 percent payout rate. She gets an immediate tax deduction, avoids capital gains tax on the stock sale, and ensures her favorite environmental nonprofits receive the remaining balance when she passes away.
Etymology
From Latin 'caritas' meaning love plus Latin 'remanere' meaning to remain — love that remains for charity.
Common Misspellings
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