What Is a Testamentary Charitable Remainder Unitrust, and Is It Right for Me?
When economic conditions shift, so do the tools individuals use for long-term financial planning and decision-making. In the current economic climate, factors like rising inflation and increased cost-of-living expenses are driving new conversations with donors seeking charitable solutions. One strategy gaining traction in recent months involves the testamentary charitable remainder unitrust (CRUT).
Testamentary CRUTs are established through an estate or revocable trust, rather than during a donor’s lifetime. This allows the donor to provide income for life (or a specified period of years) to loved ones who survive them, and an eventual gift to charity.
How Does a Testamentary CRUT Work?
You establish the CRUT agreement through your will or revocable trust.
After your passing, your executor or trustee will transfer assets to the CRUT. You can transfer cash, marketable securities, IRA assets and even real estate.
Your advisor or the charitable beneficiary may serve as trustee of the CRUT.
Once the CRUT is funded, your beneficiaries will receive a fixed percentage (5% or more) of the trust’s value each year.
What Are Some Benefits of a Testamentary CRUT?
Income for family members or heirs. A CRUT can provide supplemental income to a beneficiary for their lifetime or a term of years.
Tax savings. Your estate may qualify for a charitable deduction, helping reduce or eliminate estate taxes. If you fund your testamentary CRUT with IRA assets, payments can be spread out over a beneficiary’s lifetime, potentially minimizing income taxes. This arrangement may be more tax-efficient for your heirs than inheriting the same retirement assets outright.
Customizable and flexible. You can tailor the trust by choosing the income beneficiaries, payout rate (5% or more), the trust term and the charities that will receive the remainder.
Create a legacy for your favorite charity—like Duke! You can allocate the trust remainder to provide scholarship funds or support other areas on campus that are important to you once the trust term ends.
Testamentary CRUTs provide an opportunity to support your passions at Duke while also ensuring income for your loved ones. This is a powerful combination. To explore how a testamentary CRUT might work for you, contact us for more information and a personalized gift calculation.
Interested in learning more about testamentary CRUTs or other planned gifts? Duke’s Office of Gift Planning can help you and your advisors explore your options. For more information on how to create a lasting legacy at Duke through a planned gift, contact the Office of Gift Planning at (919) 681-0464 or giftplanning@duke.edu.
This information is provided with the understanding that neither Duke University nor the authors are providing legal, accounting or other professional advice or counsel. Please consult your personal counsel about the financial, tax and legal implications of any gift.
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