CRT
Charitable remainder trust — tax-exempt trust pays income to donor or other non-charitable beneficiary for life or term; remainder to charity. Defers capital gains on appreciated assets sold inside trust.
| Facet | Detail |
|---|---|
| Also called | Charitable remainder annuity trust (CRAT), charitable remainder unitrust (CRUT) |
| A-B / A-B-C role | None |
| When created | During life or at death (testamentary CRT) |
| Revocable | No |
| Inter vivos / testamentary | Either |
| Typical beneficiaries | Donor/spouse (income); charity (remainder) |
| Primary purpose | Income stream + charitable legacy + income tax deduction |
| Marital deduction | Estate tax charitable deduction for remainder; spouse income interest may qualify for marital QTIP-like planning in some CRTs |
| Uses estate exclusion | Reduces taxable estate by charitable remainder value |
| In survivor's estate | Depends on who holds income interest |
| Basis step-up | Trust sells appreciated assets without donor-level cap gain |
| Income tax | Trust tax-exempt; beneficiary taxed on distributions (tier rules) |
| Crummey powers | No |
| GST / dynasty | N/A |
| Spendthrift | Limited — charitable remainder fixed |
| See-through (IRA) | Not typical — QCD often better for IRA charity |
| Key tradeoff | Tax benefits vs irrevocability and actuarial complexity |