Charitable Remainder Trusts | CRT Planning for Business Owners | Intentional LLC

Charitable Remainder Trust

Convert a concentrated
position into income,
a deduction, and a
lasting legacy.

A Charitable Remainder Trust is one of the most powerful pre-transaction tools available to business owners and investors. It has to be set up before the deal closes. Most people find out about it after.

Talk to James before the deal closes

The window to use a CRT closes when the transaction does.

What a CRT actually does

Three things at once.
Most strategies only do one.

A Charitable Remainder Trust accomplishes three things simultaneously that most financial tools handle separately. It converts a highly appreciated asset into an income stream without triggering the full capital gains tax immediately. It generates a partial charitable deduction in the year of the contribution. And it creates a meaningful charitable legacy by directing the remaining assets to a cause the donor has chosen.

For a business owner approaching a sale, or an investor holding a concentrated stock position with a very low cost basis, this combination is often the most tax-efficient and personally meaningful structure available. But it is not a strategy you can execute after the transaction closes. The CRT must be established and funded before the sale is complete.

That is the single most important thing to understand about a CRT. The window is open before the deal. It closes when the deal does. Which is exactly why this conversation belongs in pre-transaction planning, not in the week after closing.

"Cash is one of the least efficient gifts a high-net-worth individual can make. An appreciated position contributed to a CRT before a sale can do far more for the cause and for the donor simultaneously."

James Roberts, Founder, Intentional LLC

Who this is actually built for

The CRT is most powerful for business owners selling a company they have held for years, investors with a concentrated stock position carrying a very low cost basis, and anyone facing a large capital gains event who also has a genuine philanthropic interest.

It is not a fit for everyone. If the cost basis is relatively high, or if the donor needs full liquidity from the transaction, other structures may be more appropriate. And if there is no genuine charitable interest, a CRT is the wrong tool entirely. The charitable planning conversation always starts with understanding what the giving is actually for, not just what the tax position is.

How it works

Three steps. One structure.
Significant impact.

Step 01

Contribute the appreciated asset

Before the sale or liquidity event closes, the donor transfers appreciated shares, a business interest, or other appreciated property into the irrevocable CRT. This triggers the charitable deduction and removes the asset from the donor's taxable estate.

Step 02

The trust sells and reinvests

The CRT sells the contributed asset, typically without immediate capital gains tax at the trust level. The proceeds are reinvested to generate the income stream that will be paid to the donor or other named beneficiaries for the term of the trust.

Step 03

Remainder passes to charity

At the end of the trust term, the remaining assets pass to the charitable beneficiary named in the trust document. A Donor Advised Fund can be named as the remainder beneficiary, giving the donor ongoing flexibility in how the charitable dollars are ultimately directed.

Two structures

CRAT or CRUT. The difference
matters more than most
people realize.

Charitable Remainder Annuity Trust

CRAT

Pays a fixed dollar amount each year regardless of how the trust assets perform. Provides income predictability but does not allow for additional contributions after establishment. Works best when the donor wants a stable, known income stream and does not anticipate making additional contributions to the trust.

Charitable Remainder Unitrust

CRUT

Pays a fixed percentage of the trust's value each year, which means the income fluctuates with trust performance. Allows for additional contributions after establishment. Works best when the donor wants the potential for income growth over time and may want to add assets to the trust in future years.

Keep reading

Related topics worth
understanding.

Charitable Planning

The broader conversation about giving with intention

Donor Advised Funds

The most flexible charitable giving vehicle available

Pre-Transaction Planning

The work that has to happen before the letter of intent is signed

Common questions

What people ask about
Charitable Remainder Trusts.

  • A Charitable Remainder Trust, or CRT, is an irrevocable trust that allows you to contribute appreciated assets, receive an income stream for yourself or other beneficiaries for a period of time, and then have the remaining assets pass to a designated charity at the end of the trust term. The contributor receives a partial charitable deduction in the year of the contribution, avoids the immediate capital gains tax that would result from selling the asset outright, and generates ongoing income from the trust.
  • A Charitable Remainder Annuity Trust, or CRAT, pays a fixed dollar amount each year regardless of how the trust assets perform. A Charitable Remainder Unitrust, or CRUT, pays a fixed percentage of the trust's value each year, which means the income fluctuates with the performance of the trust assets. CRUTs allow for additional contributions after the trust is established, while CRATs do not. The right structure depends on whether the donor prefers income predictability or the potential for income growth.
  • A CRT makes the most sense when a donor has a highly appreciated asset with a low cost basis that they want to convert into income without triggering the full capital gains tax immediately. This is most common in situations involving a business sale, a concentrated stock position, or appreciated real estate. The CRT must be established and funded before the sale or liquidity event closes. Once the transaction is final, the opportunity to use a CRT to defer capital gains on that transaction is gone.
  • The charitable deduction from a CRT is based on the present value of the remainder interest that will ultimately pass to charity. This is calculated using IRS tables and depends on the payout rate, the term of the trust, and current interest rates. The deduction is taken in the year of the contribution and is subject to AGI limitations, with any excess carried forward for up to five years. The deduction is a partial deduction, not a full one, because the donor retains the income interest.
  • Yes, and this is one of the most powerful applications of the CRT structure. A business owner can contribute shares of their company to a CRT before the sale closes. The trust then sells the shares, typically without immediate capital gains tax, and reinvests the proceeds to generate the income stream. The donor receives a charitable deduction, ongoing income, and the satisfaction of knowing that a meaningful amount will ultimately support a cause they care about. The key is that the CRT must be established and funded before the sale is complete. Learn more about liquidity event planning.
  • At the end of the trust term, the remaining assets pass to the charitable beneficiary or beneficiaries named in the trust document. The donor designates the charity at the time the trust is established, though in some structures a Donor Advised Fund can be named as the remainder beneficiary, giving the donor ongoing flexibility in how the charitable dollars are ultimately distributed.

Start the conversation

The window closes
when the deal does.

If you are approaching a business sale or a significant liquidity event, the conversation about a CRT needs to happen before the transaction closes. Schedule a conversation with James now.

Schedule a conversation

30 minutes. No pitch. No pressure.