Charitable Remainder Annuity Trust

DEFINITION of 'Charitable Remainder Annuity Trust'

A type of gift transaction in which a donor contributes assets to a charitable trust which pays an annuity designed to leave a substantial proportion of the funds to charity upon termination of the annuity. The tax consequences of this transaction may be advantageous for contributing appreciated assets, due to differences involved in the taxation of charitable trusts.

BREAKING DOWN 'Charitable Remainder Annuity Trust'

The charitable remainder annuity trust is similar to other charitable annuities. However, the remainder trust has the advantage of being structured as a separate trust fund. This means that the charity cannot incur liability as a result of the annuity because the funds are in a separate legal structure.

RELATED TERMS
  1. Charitable Gift Annuity

    A type of gift transaction where an individual transfers assets ...
  2. Charitable Remainder Trust

    A tax-exempt irrevocable trust designed to reduce the taxable ...
  3. Annuity

    A financial product that pays out a fixed stream of payments ...
  4. Valuation Period

    The time between the end of the business day of the first business ...
  5. Indexed Annuity

    A special class of annuities that yields returns on your contributions ...
  6. Annuity In Advance

    An amount of money that is regularly paid at the beginning of ...
Related Articles
  1. Financial Advisor

    Guiding Clients on Charitable Remainder Trusts

    Clients who wish to make donations to charity can reap an enormous tax deduction with charitable remainder trusts, but it must be set up correctly.
  2. Retirement

    The Best Charitable Remainder Trust for You

    Help a favorite cause and avoid a tax bite: These are the key reasons to set up a CRT. But which version best fits your needs?
  3. Financial Advisor

    Top Tips for Maximizing Charitable Deductions

    Charitable donations can be a great financial planning tool. Here are some ways to make the most of them.
  4. Retirement

    Choosing The Best Charitable Gift Annuity

    Want to support a cause you care about, but still earn income from that donation in your retirement years? This vehicle offers both.
  5. Financial Advisor

    Top Annuity Tax Deferral Strategies

    Annuities can provide tremendous tax advantages for retirement savers. Here are some tax deferral strategies to consider.
  6. Retirement

    Why You Should Set Up a Charitable Trust Now

    Now may be the best time to set up a charitable trust. Here's why.
  7. Retirement

    Who Benefits From Retirement Annuities

    Annuities guarantee some degree of fixed income in retirement. But is the security worth the fees and less favorable tax treatment? How to decide.
  8. Investing

    DIY Annuities: What You Need to Know

    Annuities are attractive because they can give you a stream of income, but they can be tricky to buy.
  9. Retirement

    Are Annuities Retirement-Only Investments?

    Learn more about why annuities are generally purchased and the way that they can positively and negatively affect an individual preparing for retirement.
  10. Retirement

    Annuities: A Good Option in Turbulent Times?

    Annuities can be an enticing option as Americans near retirement, but there are several reasons to be wary of them.
RELATED FAQS
  1. What are the easiest and most affordable types of charitable trusts to create and ...

    I want to create some kind of charitable trust to name as beneficiary on my stocks, funds, real estate and will. I have no ... Read Answer >>
  2. What are the risks of annuities in a recession?

    Distinguish between the most common types of annuities, and understand which types of annuities pose the most risk during ... Read Answer >>
  3. What are the main kinds of annuities?

    Learn about the four basic types of annuities, and why the different investment and payout options are suitable for different ... Read Answer >>
  4. Should I pull my money out of an annuity if the insurance company is having financial ...

    If an insurance company is having financial problems, you don't necessarily have to pull your money out of the annuity. Even ... Read Answer >>
  5. For what types of financial instruments would I want to calculate the present value ...

    Learn about the types of financial instruments the present value of an annuity calculation is most useful for, including ... Read Answer >>
  6. What are the best ways to sell an annuity?

    Learn about the best ways to sell annuities. Annuities are financial products that provide income on a regular basis to their ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center