Charitable Remainder Trusts

A CRT allows you to donate your capital while you live on the income. After a lifetime of making sound investments so that you can live off of the income, without the need to dip into your capital, it may make sense for you to donate a portion of your capital to your favourite charity now.

With a CRT, your legacy takes the form of assets such as cash and mutual funds that are placed into a trust. This type of trust makes the most sense for assets in excess of $25,000, which will generate sufficient investment income to cover the setup and ongoing admin costs, and provide an income to you, the donor. The trust is irrevocable after it is set up.

The charity has no access to trust capital during your lifetime and all interest and dividends are paid to you as taxable income. Upon your death, the trust assets – known as the remainder – go immediately to the charity. The advantage of this type of gift is that the investments do not form part of your estate. Remainder assets are not subject to probate fees as they would be if given through a Will bequest, nor are they usually subject to claims by creditors.

You know that the charity will receive your gift in full and you will receive a charitable receipt for a portion of your donation, based on your age at the time of the donation and on current investment rates.