Charitable Remainder Annuity Trust

Also known as A CRAT, like a unitrust, except the CRAT pays a fixed amount each year rather than a percentage of trust assets. The payment remains the same for the duration of the trust, regardless of the investment returns. Because it makes a fixed payment, CRATs cannot accept future contributions. In general CRAT is a hedge against declining economy as it provides a fixed income to the annuitant(s). The CRAT usually produces a slightly greater income tax deduction and estate tax saving than the CRUT. Trusts are typically funded with assets with a value of at least $50,000.

Illustration:

Mrs. Williams transfers $100,000 to fund her Charitable Remainder Annuity Trust. She chooses to receive $6000 each year for the rest of her life (payable quarterly). After her death the North Carolina Baptist Foundation distributes the income produced by the assets of her CRAT to the causes she named as beneficiaries – Baptist State Convention of North Carolina, Baptist on Missions and Fruitland Bible College.
The Foundation will provide calculations and full analyses of your gift for tax reporting purposes, as well as work with your financial advisor to analyze the best giving plan for you and your family.