What it is
A charitable remainder trust (CRT) is an arrangement in which assets are placed in an irrevocable trust. The trust pays income to one or more people for a set term or a lifetime. What remains afterward goes to one or more charities.
A charitable remainder annuity trust (CRAT) pays a fixed amount. That amount is set when the trust is created and does not change from year to year. A charitable remainder unitrust (CRUT) pays a fixed percentage of the trust's value, and the value is generally re-measured on a regular schedule. The payment can therefore rise or fall as the trust's value changes.
Other differences can matter too. Rules about adding more assets later, how payments are handled in a short year, and how each trust is administered can vary between the two types. The details depend on the trust document and current law, so they are worth reviewing with a professional.
How it’s traditionally been approached
People have traditionally looked at a CRAT when they want predictable, steady payments. Because the amount is fixed, it can feel simpler to plan around. It may appeal to someone who values certainty over potential growth.
A CRUT has traditionally been considered by people who want payments that may move with the trust's value. Some people also like that a unitrust structure can often be designed with added flexibility. Examples include accepting additional contributions or choosing among different payout methods.
Both are often discussed in connection with appreciated assets, such as stock or real estate, and with a desire to support charity while receiving income. Neither is right for everyone. Many people choose other approaches, such as donor-advised funds, direct gifts or bequests, depending on their goals.
How the right planner may help
The right planner may help you sort out what you want the trust to do. That could include steady income, flexibility, a particular charitable outcome or a way to handle a concentrated asset. A good conversation often starts with your goals, your family situation and the assets you are considering.
A first visit is generally a discovery conversation. The planner may ask about your income needs, your timeline, who the beneficiaries would be and which charities you care about. They may also work alongside your CPA and estate planning attorney, because the trust is a legal and tax matter.
Helpful questions to ask include these: How would a fixed payment compare with a variable one in my situation? What happens if the assets are hard to value or sell? What are the setup and ongoing administration costs? What alternatives should I consider? Who will serve as trustee? How would this fit with my broader estate plan?
The bigger picture
Choosing between a fixed and a variable income stream is partly a numbers question and partly a comfort question. Some people sleep better knowing what each payment will be. Others are comfortable with some ups and downs. Thinking honestly about how each option would feel in a quiet year can matter as much as the math.
Because these trusts are generally irrevocable, it helps to give the decision time and talk it over with family. Giving can bring a sense of purpose, but it should not create financial strain. If you want support with the wider picture of your wellbeing, a resource like Providers.plus may help you find other kinds of professionals.
Keep in mind
- This page is educational only. It is not tax, legal, investment or financial advice.
- Tax rules, payout requirements, deduction limits and other figures change over time and depend on your situation. Confirm current details before acting.
- Always review any trust with your own CPA or estate planning attorney to decide whether it suits you.
- Charitable Financial Planning is an independent directory, not a professional advisor, and does not recommend specific trustees, sponsors or charities.
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Frequently asked questions
What is the main difference between a charitable remainder unitrust vs annuity trust?
A charitable remainder annuity trust pays a fixed dollar amount set at the start. A charitable remainder unitrust pays a fixed percentage of the trust's value, which is re-measured regularly. So a CRAT payment generally stays the same, while a CRUT payment may change.
Can I add more money to a CRAT or CRUT later?
Generally, a CRUT can be designed to accept additional contributions. A CRAT usually cannot. Rules and trust terms vary, so ask your attorney how they apply to your situation.
Which is better, a CRUT or a CRAT?
Neither is better for everyone. A CRAT may suit people who prefer predictable payments, while a CRUT may suit those who want flexibility and are comfortable with variable income. A CPA or estate planning attorney can help you weigh the tradeoffs.
Who receives the money from a charitable remainder trust?
The income beneficiaries you name receive the payments for the trust's term. After that, the remaining assets go to the charity or charities named in the trust. The details are set out in the trust document.
Is a charitable remainder trust irrevocable?
In general, yes. Once you fund it, you usually cannot take the assets back or easily change the basic structure. That is why it is important to review it carefully with professionals before you sign.
How do I find a planner who can explain CRUTs and CRATs?
You can look for an independent planner with experience in charitable remainder trusts and ask how often they work with them. It also helps to ask how they coordinate with your CPA and attorney. This directory can help you start exploring educational resources and planners.
Educational resource. Charitable Financial Planning shares general information and connects people with independent planners. It is not professional advice. Talk with a qualified professional about your own situation.