How a Charitable Remainder Trust lets you sell without the capital gains bill, and keep the proceeds working for you.
If you're holding a highly appreciated stock, business interest, or piece of real estate, selling it outright can mean handing a sizable chunk of the gain straight to the IRS. A Charitable Remainder Trust offers a different path: sell inside the trust, owe no capital gains tax at the point of sale, and redirect that unlocked value into an income stream for yourself, a deduction for this year's taxes, and a legacy gift down the road.
What a CRT actually does
A Charitable Remainder Trust is an irrevocable trust you fund with appreciated assets. Because the trust itself is tax-exempt, it can sell those assets without triggering capital gains tax at the time of sale. The proceeds are then reinvested in a diversified portfolio, and the trust pays you — or another named beneficiary — an income stream for life or for a set term of up to 20 years. Whatever remains in the trust at the end of that term passes to the charity or donor-advised fund you've named.
The benefits, side by side
No capital gains tax
The trust sells the asset tax-free, so the full value — not the after-tax remainder — goes to work generating income.
An income stream
Payments can run for your lifetime or a fixed term, giving you flexibility to structure income around retirement or other goals.
An immediate tax deduction
You claim a charitable deduction this year, sized to the trust's expected remainder value — the portion ultimately destined for charity.
Diversification
A concentrated, low-basis position becomes a diversified portfolio, without the tax drag that usually comes with rebalancing.
Estate tax relief
Once assets move into the trust, they're out of your taxable estate.
A lasting charitable legacy
Whatever remains at the end of the trust term goes to the charity or donor-advised fund you choose today.
How it comes together
Draft the trust
An attorney prepares the Charitable Remainder Trust document tailored to your goals.
Fund it
You transfer the appreciated asset — stock, real estate, or a business interest — into the trust.
Sell tax-free
The trust sells the asset without triggering capital gains tax.
Reinvest
Proceeds are placed into a diversified portfolio managed on the trust's behalf.
Receive income
The trust distributes payments to you, potentially for life or for a set term.
The result is one structure doing five jobs at once: unlocking a concentrated position, generating income, cutting this year's tax bill, shrinking the taxable estate, and funding a cause you care about.
Choosing the right structure
Not every CRT works the same way. A Charitable Remainder Unitrust (CRUT) pays a fixed percentage of trust value each year — recalculated annually, with a 5% minimum payout — and allows additional contributions later. A Charitable Remainder Annuity Trust (CRAT) locks in a fixed dollar payment from day one, well suited to clients who want predictable income, though it requires the underlying assets to stay highly liquid. Variations like the NIMCRUT and Flip CRUT add further flexibility, letting income timing adjust around retirement or a major liquidity event like a business sale.
Before moving forward
- The decision is irrevocable — assets placed in the trust cannot be recovered.
- Income payments can fluctuate with market performance, depending on structure.
- There are setup, administration, investment, and tax preparation costs to weigh against the benefits.
- Tax law is complex and subject to change, which can affect long-term outcomes.
Is a CRT the right fit for your situation?If you're sitting on a concentrated or highly appreciated position and want to explore how a Charitable Remainder Trust could fit into your broader plan, let's talk it through together.