What Is a Charitable Remainder Annuity Trust (CRAT)?

A Charitable Remainder Annuity Trust (CRAT) is a donor-funded charitable trust that pays a fixed-income annuity to a designated beneficiary.

The Charitable Remainder Annuity Trust has four key characteristics.

Gift transaction – A charitable remainder annuity trust is a gift transaction.

Fixed percentage of the value of assets – Once established, the CRAT allocates a fixed income annuity. This amount is usually calculated as a fixed percentage of the initial value of the assets in the trust. At the expiration of the trust, any funds that remain in the trust are then donated to a pre-chosen charity. The fixed annuity percentage is subject to certain rules.

  • The minimum annuity distribution value is 5%.
  • The passing of the donor passes signals the expiration of the trust.

Reliable stream of income – CRATS offer a sense of reliability, in that their beneficiaries enjoy a guaranteed income stream every year; the amount received never fluctuates despite investment performance.

Shielded from liability – Because these trusts are autonomous legal structures, charitable remainder annuity trusts are shielded from liability.

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If you are ready to set your charitable remainder annuity trust up or if you have any questions, please don’t hesitate to contact us. We look forward to working with you!

Other Trusts

Charitable Remainder Trusts (CRT)

This “split-interest” giving trust preserves the value of high-value assets, affords income tax reductions, and is tax exempt for the investor.

Charitable Remainder UniTrusts (CRUT)

This type of CRT is based on a fixed percentage of the fluctuating value of the trust assets. Additional contributions are allowed.

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