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February 18, 2009

Charitable Remainder Trust (CRT)

Your Guide

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Definition

A trust where the donor transfers assets to an annuity trust or unitrust. Under a CRT , The pays the donor or another beneficiary receives payments of a certain amount each year for a specified period. The term of the trust is limited to the longer of 20 years or the life of the designated recipients, at the end of which  the remaining trust assets must be distributed to a charitable organization.

Contributions to the charitable remainder trust can qualify for a charitable deduction. This charitable contribution deduction is limited to the present value of the charitable organization’s remainder interest

Referring Cite

Revenue Procedures 89-20, 89-21, 90-30, and 90-31.

Additional Helpful Information

  • Designating a CRT as the beneficiary of a retirement account may mean that beneficiaries of the trust are not eligible for the income in respect of a decedent (IRD) deduction for post-death distributions. Private Letter Ruling 199901023
  • Revenue Ruling 2008-41 provides taxpayers with guidelines on dividing a charitable remainder trust (CRT) into two or more separate and equal CRTs without violating the provisions of § 664 of the Internal Revenue Code.

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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