Charitable Remainder Trust

How It Works

  • Donate cash, stocks or non-publicly traded assets such as real estate, private business interests and private company stock and become eligible to take a partial tax deduction. The partial income tax deduction is based on the type of trust, the term of the trust, the projected income payments, and IRS interest rates that assume a certain rate of growth of trust assets.

  • You or your chosen beneficiaries receive an income stream. Based on how you set up the trust, you or your stated beneficiaries can receive income annually, semi-annually, quarterly or monthly. Per the IRS, the annual annuity must be at least 5% but no more than 50% of the trust’s assets.

  • After the specified timespan or the death of the last income beneficiary, the remaining CRT assets are distributed to the JFS Foundation. When the CRT terminates, the remaining CRT assets are distributed to the JFS Foundation. 

Benefits

  • A CRT preserves the value of highly appreciated assets.

  • With a CRT, you have the potential to take a partial income tax charitable deduction when you fund the trust, which is based on a calculation on the remainder distribution to the JFS Foundation

  • The CRT’s investment income is exempt from tax. This makes the CRT a good option for asset diversification

  • CRT is a good option if you want an immediate charitable deduction, but also have a need for an income stream to yourself or another person. 

  • CRT is also a good option if you want to establish one by will to provide for heirs, with the remainder going to the JFS Foundation. 

A charitable remainder trust (CRT) is an irrevocable trust that generates a potential income stream for you, as the donor to the CRT with the remainder of the donated assets going to the JFS Foundation.

This charitable giving strategy generates income and can enable a donor to pursue your philanthropic goals while also helping provide for living expenses. 

How a charitable remainder trust works

A charitable remainder trust is a "split interest" giving vehicle that allows you to make contributions to the trust and be eligible for a partial tax deduction, based on the CRT’s assets that will pass to charitable beneficiaries. You can name yourself or someone else to receive a potential income stream for a term of years, no more than 20 and then name one or more charities to receive the remainder of the donated assets.

There are two main types of charitable remainder trusts:

  • Charitable remainder annuity trusts (CRATs) distribute a fixed annuity amount each year, and additional contributions are not allowed.

  • Charitable remainder unitrusts (CRUTs) distribute a fixed percentage based on the balance of the trust assets (revalued annually), and additional contributions can be made.

 

Contributions to CRATs and CRUTs are an irrevocable transfer of cash or property and both are required to distribute a portion of income or principal, to either the donor or another beneficiary. At the end of the specified lifetime or term for the income interest, the remaining trust assets are distributed to the JFS Foundation. 

You can use the following types of assets to fund a charitable remainder trust.

  • Cash

  • Publicly traded securities

  • Some types of closely held stock 

  • Real estate

  • Certain other complex assets

 

The CRT is a good option if you want an immediate charitable deduction, but also have a need for an income stream to yourself or another person. It is also a good option if you want to establish one by will to provide for heirs, with the remainder going to the JFS Foundation.

Questions? Already included the JFS Foundation in your trust?

Please let us know if you have already included the JFS Foundation in your charitable trust or if you are considering doing so.
We'd love to hear from you!

CONTACT US

 

The JFS Foundation

5402 Arapaho Road

Dallas, TX 75248

972.437.9950