How a charitable remainder trust works
A CRT lets you give an appreciated asset, skip the immediate capital gains tax, take a charitable deduction now, and collect an income stream for life — then leave the remainder to a charity you choose. It turns a tax bill into a coordinated income and giving plan.
These are the questions that matter most when you’re looking at a CRT.
What is a CRT?
A CRT is an irrevocable trust that does four things at once. You donate an appreciated asset and take a charitable deduction now. The trust sells the asset with no capital gains tax. It pays you an income stream for life or a set term. And whatever is left at the end goes to a charity you name.
For you
Income and a deduction
You get a charitable deduction now and an income stream for life or a term of years — from an asset that was just sitting there.
For the charity
The remainder
When the income term ends, whatever is left in the trust goes to the charity you chose.
How does it skip the capital gains tax?
Here is the heart of it. If you sold a highly appreciated asset yourself, you would owe capital gains tax on all of that growth — often a large bite. A CRT is tax-exempt, so when it sells the asset you donated, no capital gains tax is owed. The full value stays invested and paying you income.
Selling it yourself
Taxed up front
- Capital gains tax is owed on all the appreciation
- You reinvest only what is left after tax
- No charitable deduction
Giving it to a CRT
Full value keeps working
- The trust sells it with no capital gains tax
- The full value stays invested and pays you income
- You take a charitable deduction now
What does it look like in practice?
The same appreciated asset can leave you with far more income — and a charitable legacy — depending on how you sell it.
Without a CRT
James sells and gets taxed
James Caldwell holds stock he bought years ago that has grown enormously. If he sells it himself, capital gains tax takes a large slice, and he reinvests only what is left.
With a CRT
James gives, then gets paid
James gives the stock to a CRT. It sells with no capital gains tax, pays him income for life, and gives him a deduction now — and the remainder eventually supports the cause he cares about.
James Caldwell is a composite example used to show how the planning works — not a real client.
Is a CRT right for me?
Five short choices. Brent reads your answer back to you at the end.
A 30-second guided quiz. Get a personal read on whether a CRT fits.
How Brent helps you
- Looks at whether a CRT’s income, deduction, and giving goals actually match yours
- Chooses between a fixed (CRAT) and a variable (CRUT) payout to fit your needs
- Coordinates the timing of the gift and sale with your CPA
- Can pair the CRT with life insurance so your family is still provided for
