Charitable Remainder Trust Calculator

A charitable remainder trust (CRT) pays income to a non-charitable beneficiary for a term, then distributes whatever remains to charity -- Congress created the CRT in the Tax Reform Act of 1969 specifically to prevent abuse of older split-interest charitable gift structures, and this calculator models a term-of-years charitable remainder ANNUITY trust (CRAT), capped at 20 years under federal law (IRC Sec. 664(d)(1)(A); a CRT can instead run for one or more measuring lives, or be structured as a unitrust (CRUT) that revalues its payout against the trust's fluctuating balance each year, neither of which this calculator models). Annual Income is simply Funding Amount times Annual Payout Rate -- a fixed dollar amount every year of the term, unaffected by Term (Years), Expected Growth Rate, Tax Bracket, or the IRS Section 7520 Rate. Charitable Deduction follows the real IRC Sec. 664 / Sec. 7520 methodology (26 CFR 20.2031-7(d), IRS Pub.

1457 Table B): it is Funding Amount minus the present value of the retained income interest, where that present value is Annual Payout Rate times Funding Amount times an annuity factor of (1 - (1 + Section 7520 Rate)^-Term) / Section 7520 Rate. A higher Section 7520 Rate discounts the income stream more heavily, which LOWERS its present value and RAISES Charitable Deduction; a longer Term or a higher Annual Payout Rate both raise the present value of the income stream and so LOWER Charitable Deduction. Expected Growth Rate has no effect on Charitable Deduction at all -- the deduction is a fixed actuarial calculation set at funding, independent of how the trust's investments actually perform afterward. Federal law also requires the present value of the charitable remainder interest to be at least 10% of the funding amount when the trust is created (IRC Sec. 664(d)(1)(D)) -- this calculator does not check that threshold for you, so verify Charitable Deduction as a percentage of Funding Amount meets it before relying on these figures. Total Income Over Term and Remainder to Charity project the same fixed annual payout forward against Expected Growth Rate; because a CRAT's payout does not shrink when the trust's investments underperform, a payout rate that is high relative to Expected Growth Rate can genuinely deplete the trust's principal before the term ends, at which point income stops and Remainder to Charity is zero.