Philanthropy Tools & Techniques: Charitable Remainder Trusts

Philanthropy Tools and Techniques Charitable Remainder Trusts

In today’s high-interest rate environment, individuals seeking to balance their financial well-being with their philanthropic aspirations have an ally at their disposal: the Charitable Remainder Trust (CRT). This unique financial tool offers a strategic avenue for generous individuals to secure an income stream, offset taxes, and contribute to their preferred charities while navigating high-interest rates.

A Charitable Remainder Trust is an irrevocable trust arrangement that enables individuals to donate assets to a charitable organization, with the promise of receiving an income stream for themselves or other beneficiaries during a predefined period. Once this period expires, the remaining assets in the trust are directed to one or more charitable causes designated by the donor. The advantages of utilizing a CRT include the ability to designate specific charitable entities as remainder beneficiaries, as well as lifetime beneficiaries to receive an identified income stream for a specific period time. Those lifetime beneficiaries could either be the donor or other named individuals such as family members. A donor may contribute assets such as cash, securities or real estate to a CRT. Once established, a CRT is irrevocable, meaning that the terms may not be altered and the donor may not reclaim the donated assets.

A Charitable Remainder Trust can be a particularly advantageous tool in a high-interest rate environment. Its ability to provide steady income, offer tax efficiency, promote asset growth, and facilitate diversification makes it an attractive option for many individuals, including retirees, high-net-worth individuals, philanthropists, and those seeking tax benefits.

For those who wish to integrate their financial and generosity planning, a CRT presents a unique opportunity to achieve both objectives simultaneously. We recommend you consult with your SignatureFD advisor to explore whether a Charitable Remainder Trust is a suitable tool for your specific financial situation and philanthropic aspirations.

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