Charitable Remainder Trusts

How a Charitable Remainder Trust Works

A charitable remainder trust (CRT) lets you make a meaningful gift to St. Thomas while receiving income for life—or for a set term—for yourself or a loved one.

Here's how it works:

1. You transfer cash, appreciated stock or mutual funds to fund the trust.
2. If funded with appreciated assets, the trust sells them tax-free.
3. The trust reinvests the funds and pays income to you or a loved one for life or up to 20 years.
4. You receive an immediate income-tax deduction when you establish the trust.
5. After all payments, the remainder supports St. Thomas students.

Because payments are based on a percentage of trust assets, your income can grow over time. Many donors use charitable remainder trusts to supplement retirement income, provide for loved ones, and support priorities such as endowed scholarships at St. Thomas.

Tax Benefits: Bypass Capital Gains

One of the greatest advantages of a charitable remainder trust is avoiding capital gains taxes on appreciated assets.

By establishing a charitable remainder unitrust with appreciated stock or mutual funds, you can bypass capital gains tax. This tax benefit is in addition to the income-tax deduction you would take in the year you made the gift. The trust will sell your asset tax-free and reinvest in assets that produce income for your future.

Types of Charitable Remainder Trusts

Charitable Remainder Annuity Trust (Fixed Payments)

Some donors prefer to receive payouts that are the same every year. A charitable remainder annuity trust pays a fixed amount whether the market goes up or down.

Testamentary Charitable Remainder Trust (Legacy Giving for Heirs)

Donors looking to provide for their heirs can establish a testamentary charitable remainder unitrust. After the donor passes, the estate receives a tax deduction, heirs receive income each year, and the remainder helps further the education of future Tommies.