Under the Charitable Remainder Annuity Trust, a fixed amount of income is paid annually to a non-charitable beneficiary. The grantor can take a tax deduction based on the present value of the charity's remainder interest at the time the charitable income is transferred to the trust. If the income generated by the trust is insufficient to make the required payments to the non-charitable beneficiary, then capital gains or trust principal can be used to make up any shortage. 

 

Conversely, if the trust income is greater than the amount required to make the payments to non-charitable beneficiaries, then any excess amount is reinvested in the trust.

  

The annuity amount paid to the income beneficiary cannot be less than 5% of the initial value of the trust, nor can it be greater than 50%. The value of the charitable remainder interest must be worth at least 10% of the initial value of the trust.

Charitable Remainder Trust (Definition) | Charitable Remainder Unitrust | Charitable Remainder Trust Calculator | Charitable Remainder Trust (Illustration) | Advantages of a Charitable Remainder Trust

 

 

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