Charitable remainder trust (CRT) - Financial definition
Concise definition of the term charitable remainder trust
A charitable remainder trust (CRT) is a tax-exempt, irrevocable trust designed to reduce the taxable income of individuals by dispersing income to the trust beneficiaries for a specified period and donating the remainder to a designated charity.
Comprehensive definition of the term charitable remainder trust
A charitable remainder trust (CRT) is a financial vehicle often utilized in estate planning to provide income streams to beneficiaries, typically the grantor or their family, for a set term or for life, with the remaining assets eventually transferring to a charity. This structure allows the grantor to receive an immediate tax deduction, reduce capital gains taxes on appreciated assets, and potentially decrease estate taxes.
For instance, an individual might contribute highly appreciated stock to a CRT, receive annual income based on the trust's value, and, after the trust term ends, ensure that the remaining assets support their chosen charitable cause.