CHARITABLE REMAINDER TRUSTS

Charitable remainder trusts (CRTs), like charitable gift annuities (CGAs), are life income gifts: you transfer assets now, receiving a charitable deduction for a portion of the transfer, and you or a beneficiary receives income for the rest of your life or a fixed period of time. Both the National Academies and you can benefit from life income gifts such as these.

You can also set up a testamentary CRT, to be established upon your passing. While you will not receive a charitable deduction, your estate will.

HOW IT WORKS
With a CRT, you irrevocably put assets (cash, securities, etc.) in a trust. The trust then provides income payments of at least 5% annually to you or a named beneficiary. Depending on how you set up the trust, the payments will continue for a fixed period of time, or until the death of the beneficiary. At that time, the remaining assets are transferred from the trust to the National Academies. When you first set up your CRT, you can designate how you would like the Academies to use these funds.

The amount of income paid out each year during the life of the trust depends on whether it is a charitable remainder annuity trust or a charitable remainder unitrust.

CHARITABLE REMAINDER ANNUITY TRUST
A charitable remainder annuity trust provides a fixed dollar amount with each payment to the beneficiary. This amount corresponds to a percentage of the original investment paid out annually. For example, a $100,000 charitable remainder annuity trust might pay out 7.5% annually. In this situation, the beneficiary would receive $7,500 each year for the lifetime of the beneficiary or a fixed period of years. The $7,500 may be paid in one sum each year, or in several installments throughout the year.

CHARITABLE REMAINDER UNITRUST
The amount paid annually to the beneficiary of a charitable remainder unitrust is a fixed percentage of the fair market value of the assets, as determined each year. For example, a charitable remainder unitrust might pay out 5.5% annually. If the assets were valued at $100,000, the beneficiary would receive $5,500 that year (5.5% of $100,000). If the assets were valued at $125,000 the next year, the beneficiary would receive $6,875 (5.5% of $125,000). As with a charitable remainder annuity trust, the payments may be made in one lump sum each year, or in several installments throughout the year.

DEDUCTION CALCULATOR
Use the Charitable Deduction Calculator to estimate income projections or tax deductions available when you make a planned gift, such as a charitable remainder trust or charitable gift annuity. These calculations are confidential.

If you would like further information about charitable remainder trusts, contact us at giving@nationalacademies.org or 202.334.2431.

You may also wish to visit our Estate Planning page.

This information reflects, in very general terms, how a gift might affect specified tax liabilities. This is not an effort to reflect your current tax picture or suggest that a particular gift will have the indicated result in your case; only your lawyer and accountant can do that. We suggest you consult your professionals before acting upon the concepts reflected here.