A charitable remainder trust (CRT) is an agreement between a donor and the charity that places a portion of the donor's assets in trust for a term of years or life. During the trust term the donor (and/or another beneficiary) will receive regular income payments derived from the trust assets (corpus); when the term has ended, the assets pass to a charity.

A charitable remainder trust can be established during the donor's life or at death by will. Assets commonly donated to a charitable remainder trust include cash, appreciated securities, real estate, and the cash surrender value of a life insurance policy.

There are two types of remainder trust, which are distinguished by the form of payment chosen:

1. Fixed Annual Dollar Amount (Charitable Remainder Annuity Trust, or CRAT); and
2. Fixed Percentage of the Trust Assets Revalued Annually (Charitable Remainder Unitrust, or CRUT).

The income distributed from a CRT cannot exceed 50 percent of the trust's fair market value. In addition, the code requires that the actuarial value of the charitable remainder be at least 10 percent of the net fair market value of property transferred in trust on the date of contribution to the trust. The minimum annual pay-out percentage for a charitable remainder trust is 5 percent of the trust's fair market value.

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