Give & Receive - Charitable Remainder Annuity Trust (CRAT) | InFaith Community Foundation

Give & Receive

Charitable Remainder Annuity Trust (CRAT)

A CRAT is a trust that makes fixed, regular payments to the donor or other named income recipient. The trust can be created with cash and/or publicly-traded securities/mutual funds. These payments can be made for life, a term of up to 20 years or both. The amount remaining in the trust at the termination of the trust will go to the donor's charitable fund at InFaith, benefitting charities or areas of charitable work recommended by the donor.

How to Establish a CRAT
    1. Request a personalized illustration for your client using our request form, or call 800-365-4172 and speak to a Gift Planner.  To create a customized illustration for your client, InFaith requires the following information:
    • Client's name, birthdate and tax bracket; and,
    • Proposed gift amount, including cost basis.

    InFaith sends you an illustration packet to review with your client.

    If your client wishes to proceed and establish an annuity trust, complete and return the Charitable Remainder Trust Application, IRS Form W-9 and Fund Workbook included in the illustration packet.

    If the client is giving cash, please do not send any money at this time.

    If the client wishes to give stock, include copies of either the stock certificates or the most recent brokerage statement. InFaith will contact you with specific instructions on how to transfer the stock.

    Target Audience
    • Clients who want fixed income for set term-of-years, rather than life.
    • Older clients (70+) seeking a fixed income stream.
    • Fiscally conservative clients interested in converting an existing asset into an ongoing stream of income.
    • Clients who wish to give appreciated stock and bypass associated gains.
    • Clients who have maxed out qualified retirement plan contributions, but still need additional retirement income.
    • Clients with stock who are seeking ongoing income for long-term care or wealth replacement insurance premiums.
    Tax and Financial Benefits of a CRAT
      • The trust beneficiary receives fixed payments for life, or for a fixed term of years.
      • The donor receives a charitable income tax deduction in the year of the gift.
        • For gifts of cash, the annual deduction limit is 60% of the donor’s AGI (for gifts January 1, 2018 and thereafter).
        • For gifts of long-term appreciated securities, the annual deduction limit is 30% of the donor’s AGI.
        • Unused charitable deductions may be carried over an additional 5 years.
      • The annuity trust sells appreciated assets tax-free – the proceeds are reinvested to produce income.
      • The gift minimum is $50,000. While additional gifts are not permitted to the trust, the donor may create another trust to receive an additional income stream.
      Benefits to you, the Financial Professional

      InFaith Community Foundation will support you with a full range of charitable products and services, and you'll be compensated for your efforts by Thrivent or American Funds.

      More about CRATs

      Annuity trust payout rate. In determining a payout rate, InFaith looks to various factors, including the current economy, the prevailing IRS discount rate and the age of the trust income beneficiaries. Once the percentage has been set in the signed trust document, it cannot be changed. In the event of an extended downturn in the investment markets, it’s possible a trust with a higher trust payout rate may exhaust the trust principal prior to the expected termination of the trust. Payments are not guaranteed beyond the exhaustion of the trust’s assets.

      Payment recipients. Payments can be paid to the donor, a relative or friend, and are taxable as income. There may be gift/estate tax consequences if someone other than the donor or the donor’s spouse is named as an income recipient.

      Resources to Support Your Work

      contact a gift planner for assistance