A charitable remainder trust (CRT) presents an opportunity for a donor to provide lifetime income for one or more recipients and a charitable income tax deduction.

Summary of Benefits

1. Donor selects the payout rate (usually between 5 and 7%, the higher the payout rate the lower the tax deduction).
2. Income for life and perhaps spouse’s life as well.
3. If funded with securities, donor avoids capital gains tax
4. Donor may choose to act as trustee to manage the trust
5. The trustee may invest in almost any investment, including tax free bonds.
6. Donor may designate the trust for the benefit of a particular department

Types of Charitable Remainder Trusts

There are two basic kinds of remainder trusts:

A Charitable Remainder Annuity Trust (CRAT)

1. Receive a fixed dollar income paid annually, semi-annually or annually
2. Obtain a partial charitable deduction
3. Increase your income from a low-yield asset
4. Gain freedom from investment management
5. Avoid up-front capital gains tax on long-term appreciated assets used to fund the trust

Alternatively, a Charitable Remainder Unitrust (CRUT)

1. Pays the donor a predetermined percentage of the fair market value of the trust’s assets and in revalued annually.
2. If the trust’s assets increase, the donor receives a larger payment, providing a hedge against inflation. 
3. If the trust’s assets decrease so do the payments

How to Set Up Charitable Remainder Trusts

Charitable Remainder Trusts must be drafted and prepared by the donor’s own attorney. This is to avoid any conflict or perceived conflict of interest. Members of the Planned Giving Department at NJIT are on hand to assist donors and their attorneys with language and any questions that arise. NJIT is also able to serve as trustee of a charitable remainder trust, if the donor so desires.

Summary of Charitable Remainder Trusts

1. Avoid Capital Gains tax on the transfer of appreciated property
2. Increase dividends ranging from 1-2% to as much as 6% or more
3. Obtain a charitable income tax deduction
4. Establish an endowed fund at NJIT through the trust

Contact Us

If you have any questions about any charitable giving information or opportunities to support a specific college or program, please contact the Office of Planned Giving at (973)596-8548 at mproyor@njit.edu.