Charitable Remainder Trusts

A charitable remainder unitrust (CRUT) is a tax-exempt trust. You contribute an appreciated asset, the trust sells it, and no capital gains tax is due at the sale. The full pre-tax proceeds are reinvested and the trust pays you a fixed percentage of its value each year, between 5% and 50%, for a term of up to 20 years or for life. Whatever remains at the end passes to charity, which must be at least 10% of the initial contribution on an actuarial basis.

Why the math can work

The value comes from compounding the deferred tax. Sell $5M of zero-basis stock outright at a combined 30% rate and you reinvest $3.5M. Sell it inside a CRUT and $5M compounds. You pay tax gradually as distributions come out, under ordering rules that treat payouts as income first. In long-duration, high-return scenarios the trust route can produce meaningfully more after-tax wealth than an outright sale, and you receive a charitable deduction in year one for the present value of the remainder interest.

What the marketing usually skips

• The remainder is real. A portion of the assets genuinely goes to charity. If you have no philanthropic intent at all, the comparison gets harder to win.
• Distributions carry out ordinary income first. The character ordering (ordinary, then capital gain, then other, then principal) means early payouts are often taxed at the highest rates.
• It is irrevocable. You can change the charitable beneficiary, but you cannot unwind the trust and take the assets back.
• Payout rate and term interact. Higher payout rates return money to you faster but shrink the deduction and can fail the 10% remainder test.

Our role

We compare an outright sale against multiple trust designs using your basis, state residency, expected return, and payout preferences, and we present the comparison with the assumptions visible. If the structure clears the bar, we coordinate drafting counsel and the trustee, and we manage the trust's portfolio inside your overall allocation.