Weekend Reading: Maximize Retirement Savings With Charitable Remainder Trusts: A 2023 Guide

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
Weekend reading charitable remainder trusts maximize retirement savings Weekend reading charitable remainder trusts maximize retirement savings
Weekend Reading

Charitable Remainder Trusts (CRTs) have long been effective tools for optimizing your investment tax efficiency.


The basics: There are two main types of CRTs: Charitable Remainder Annuity Trusts (CRATs) with fixed payments, and Charitable Remainder Unitrusts (CRUTs) with payments adjusted annually based on trust asset values. Variations include the Net Income CRUT (NICRUT) and Net Income with Make-Up CRUT (NIMCRUT). In regard to tax efficiency, CRTs carry tax-exempt status, the ability to generate charitable deductions and a four-tier income categorization system. Three examples illustrate how they can help enhance your tax efficiency in retirement:

📌 By selling concentrated employer stock: CRTs facilitate the sale of highly appreciated assets like employer stock, deferring capital gains over the trust's term and providing a charitable deduction.

📌 Through portfolio rebalancing: CRTs allow you to contribute appreciated assets and generate a charitable deduction while receiving annuity payments in retirement.

📌 By supplementing your retirement plan: A Net Income with Make-Up CRUT (NIMCRUT) can be utilized to accumulate additional retirement funds in a tax-efficient manner, providing you greater control over income recognition and long-term tax efficiency.

If you are at all charitable-minded, you should leverage the variety of options available to maximize your tax deductions, allowing you to be even more generous with your wealth.