Is a Charitable Remainder Trust Right for You?

By FiduciaryCalculator Editorial · 9 min read · Updated 2026-06-09

A CRT can turn an appreciated asset into lifetime income, a tax deduction, and a gift to charity. Here's the trade-off in plain terms.

What a CRT does

A charitable remainder trust (CRT) is an irrevocable trust that pays you (or another beneficiary) an income stream for a term of years or for life, after which whatever remains passes to charity. In exchange for that future gift, you receive an immediate partial income-tax deduction and, critically, the ability to sell appreciated assets inside the trust without an immediate capital-gains hit.

The CRT Calculator models all three outputs at once: the income you receive over time, the estimated charitable deduction, and the remainder that ultimately goes to charity.

The appreciated-asset advantage

The classic use case is a low-basis, highly appreciated asset — concentrated stock, a business interest, or real estate. If you sold it directly you would owe capital-gains tax immediately. Contribute it to a CRT instead, and the trust (a tax-exempt entity) can sell it without that immediate tax, leaving the full value invested to generate your income.

This is why CRTs are popular with people facing a large, one-time gain. The deferral lets far more capital stay at work than an outright sale would allow.

CRUT vs. CRAT

There are two flavors. A charitable remainder unitrust (CRUT) pays a fixed percentage of the trust's value, recalculated each year — so your income rises and falls with the portfolio. A charitable remainder annuity trust (CRAT) pays a fixed dollar amount set at the start, which never changes.

A CRUT offers inflation upside and is the more common choice; a CRAT offers predictability. Our calculator models the unitrust approach, paying a percentage of the beginning-of-year balance.

How the deduction is determined

Your charitable deduction is not the full asset value — it is the present value of the charity's projected remainder interest, calculated using an IRS discount rate (the §7520 rate), the payout rate, and the trust term. Higher payout rates and longer terms leave less for charity, which means a smaller deduction.

The IRS also requires that the projected remainder be at least 10% of the initial value, which effectively caps how high your payout rate can go. The calculator's deduction figure is an estimate to illustrate the trade-off, not a substitute for a formal valuation.

Is it worth it?

A CRT makes the most sense when you have a highly appreciated asset, a genuine charitable goal, and a desire for lifetime income. It is irrevocable, so it is not the right tool if you might need the principal back. The remainder going to charity is real money leaving your family — the income, deduction, and tax deferral are what you receive in return.

Because a CRT involves legal drafting, asset valuation, and ongoing tax filings, it should be set up with an estate attorney and managed at an institution comfortable with trust investing. Advisor directories and legal-document services can help you assemble that team.