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Charitable Remainder Trust

A charitable remainder trust is an arrangement in which property or money is donated to Augustana College, but the donor (called the grantor) continues to use the property and/or receive income from it while living. The beneficiaries receive the income and Augustana receives the principal after a specified period of time. The grantor avoids any capital gains tax on the donated assets, and also gets an income tax deduction for the fair market value of the remainder interest that the trust earned. In addition, the asset is removed from the estate, reducing subsequent estate taxes. While the contribution is irrevocable, the grantor may have some control over how it is invested. CRTs come in two main types: a charitable remainder unitrust (which pays a fixed percentage of the trust's value annually), and a charitable remainder annuity trust (which pays a fixed dollar amount annually).

Charitable Remainder Unitrust (CRUT)

How a CRUT works:

  • Establish a CRUT and transfer your highly appreciated asset(s) into the trust.
  • The asset(s) are sold without creating a taxable event, increasing the assets' income potential. The proceeds are now invested for generating income to the donor(s).
  • The Unitrust pays a fixed percentage (minimum 5%) on the annual trust value. If the trust grows in value, the income will also increase. The principal can also be used to meet minimum payout requirements.
  • The CRUT may receive additional contributions over time.
  • The donor receives a tax deduction based on an IRS formula.
  • At the death of the donor(s), the charity receives the remaining assets in the trust.

Charitable Remainder Annuity Trust (CRAT)

How a CRAT works:

  • Establish a CRAT and transfer your highly appreciated asset(s) into the trust.
  • The asset(s) are sold without creating a taxable event, increasing the assets' income potential. The proceeds are now invested for generating income to the donor(s).
  • The Annuity pays a fixed percentage of the trust assets (minimum 5%) as income. The income is fixed and is paid regardless of investment performance.
  • The CRAT may not receive additional contributions once the donor establishes it.
  • The donor receives a tax deduction based on an IRS formula.
  • At the death of the donor(s), the charity receives the remaining assets in the trust.

For more information, please contact:

Scott Park, Assistant Vice President of Planned Giving
Augustana College
639 38th Street
Rock Island, IL 61201
(800) 798-8100 x7587
scottpark@augustana.edu