Charitable remainder trust
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A charitable remainder trust lets you give an appreciated asset, such as a business, property or concentrated stock, to a trust that can sell it without paying capital gains tax. The trust pays you an income for life or a set number of years, and what's left at the end goes to charity.
You get a partial charitable deduction when you fund it, and the full sale price stays invested to produce your income instead of a portion going to tax.
How it works
Put an appreciated asset, like a business or property, into a trust. The trust sells it without tax, pays you income for life or a set term, and what’s left goes to charity. You get a partial deduction now.
What makes it hold up
- The trust document from an attorney
- An appraisal for anything other than public stock
- The trust’s yearly tax return
Risks
Low to moderate. The gift is permanent. Pre-arranged sales before the asset goes in can make the gain taxable to you.
Questions to ask your CPA
- Does this beat selling and paying the tax for this asset?
- How much income would it pay us?
Common questions
How much income does it pay?
At least 5% of the trust's value each year, either as a fixed amount or a fixed percentage of its value recalculated yearly. The rate you choose affects your deduction.
How long can it last?
For your life, your joint lives, or a term of up to 20 years. At least 10% of the starting value has to be projected to go to charity.
Can I change my mind later?
No. The gift to the trust is permanent, so it suits assets you intend to sell and live on anyway.
What can go wrong?
If a sale is already arranged before the asset goes into the trust, the gain can be taxed to you. Fund the trust before a buyer is committed.
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Education, not advice. Tax law changes and every situation is different, so confirm the details with your CPA or tax advisor before acting. This page was last checked against tax law as of October 2026, including the 2025 tax law, in October 2026.