CRTs the Summer’s Hottest Trend

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The Hottest Trend this Summer is CRTs

Just like the Paris Olympics and Inside Out 2, Charitable Remainder Trusts (CRT)s are hot this Summer. A charitable remainder trust (CRT) is an irrevocable trust that generates a potential income stream for you, as the donor to the CRT, or other beneficiaries, with the remainder of the donated assets going to your favorite charity or charities. At AJM&A we can explain the many trust types.

You may wonder what makes a CRT a hot trend, there are two reasons. First, establishing a Charitable Remainder Trust immediately results in an income tax deduction. The higher the IRS 7520 rate, the higher the deduction. Recently, the 7520 rate has increased significantly in recent years.

What is the 7520 rate and what is it used for?

The Section 7520 interest rate (1) is used to determine the value of split-interest trusts, such as CRTs, Charitable Lead Trusts, Qualified Personal Residence Trusts, and Grantor-Retained Annuity Trusts. For a CRT, the IRS starts by discounting the annual payouts over the duration of the trust to the non-charitable beneficiaries

The other reason CRTs are hot is due to the unprecedented performance of stocks like NVIDIA and Tesla. This has led to many new millionaires being created. These new millionaires have stock positions that are highly concentrated and by nature, risky. Upon diversification, these positions would trigger substantial capital gains taxes, but not so with a CRT.

The advantages of a Charitable Remainder Trust include tax efficiency on an asset sale, income provision for the donor, immediate tax deduction, charitable contributions upon the donor’s death and estate tax benefits. Call us at 312.578.9300 or email with any questions or to set up a CRT.