Charitable Remainder Annuity Trust (CRAT)

A charitable remainder annuity trust (CRAT) is created by transferring a portion of your current assets to a trust. The trust pays a fixed percentage for life regardless of the performance of the trust and the income is paid each year without change. A CRAT is based on the initial value of trust assets with a 5 percent minimum income required to be paid to the income beneficiary annually. At the death of the donor or donors the remaining assets are transferred to the charity or charities named in the trust.

Advantages:

• Annual income for life
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• Income-tax deduction at the inception of the trust
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• Prevention of capital gains and gift taxes which can often range from 10 percent to 20 percent

Limitations:

• Legal counsel should prepare documents to ensure compliance with state and federal requirements
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• Annual trust accounting required

Types of asset considerations for CRATs:

• Appreciated or low-yield securities
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• Real estate
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• Cash
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• IRA and other retirement plan assets

If you would like further information on CRATs, contact your financial advisor, attorney or the Calvary Chapel Stewardship Department at 954-556-4606.

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