Charitable Remainder Trust

Turn your appreciated assets into cash.

A Charitable Remainder Trust (CRT) is a trust that can be funded with cash, real estate or stock to produce income for the lifetimes of you and a loved one. The funds are invested to grow with inflation and can be paid monthly, quarterly or annually, according to your preferences. At the end of the trust, Children’s Medical Center Foundation receives the remainder of the funds to make life better for children.

How does a CRT work?

You choose the asset (cash, stock, real estate) you would like to donate.
Children’s Health creates a legal trust agreement and assets are transferred into the trust.
Cash or proceeds from the sale of stock or real estate are invested in the trust for a term of years (up to 20) or lifetime.
You receive income payments on a monthly, quarterly, or annual basis.
Children’s Medical Center Foundation receives the remainder of the trust when the term is completed.

Benefits

Avoid capital gains tax on the transfer of real estate to a CRT
Serve as an alternative to a 1031 Exchange
You will receive income for lifetime or term of years for self, spouse, or other beneficiary
Step down from the role of landlord
Receive a charitable income tax deduction for the FMV of the real estate
Make life better for children

Illustration of a Charitable Remainder Trust

Carl and Louise, 83 and 80, own an apartment building in Richardson, Texas, producing an estimated annual net income of $81,000. They no longer wish to act as landlords, but do not wish to give up their consistent income stream. With an outright sale, they would incur significant capital gains taxes on the appreciation of the property. However, they choose to transfer their property into a Charitable Remainder Trust, sell the property, and invest the proceeds in the trust. They receive a fixed payout rate for their lifetimes that is higher than their current income from rental payments. At the end of the term of the trust, the remainder goes directly to making life better for children at Children’s Health.

*Estimated blended Federal Long-Term Capital Gains Tax Rate of 20%, assumes an estimated cost basis of $0.
**Based on the donor ages of 83/80. This deduction can be used to offset other tax liability and can be carried forward for an additional five years.
***The estimated net income in the outright sale column depends on how the client decides to invest the net proceeds from the sale of the property. The net income from the Charitable Trust example reflects a 6% return based on its annual value.
These calculations are estimates and used for illustration purposes only and should not be considered legal, accounting, or other professional advice. Your actual benefits may vary depending on several factors, including the timing of your gift.

Get Started Today

Our team of experts is here to help review types of properties that may be well-suited for a CRT, draft complimentary proposals and agreements, and work with our investment partners to turn your proceeds into a diversified portfolio to generate lifetime income for you and a loved one.