A charitable remainder trust (CRT) is an irrevocable trust that lets you contribute appreciated assets, receive a steady income stream for a term of years or for life, and leave whatever is left to the charity you choose. The IRS lets you claim an immediate income-tax deduction based on the present value of that future gift, which is why the deal can look surprisingly large on paper. This calculator walks through the three numbers that matter: the annual payout to you, the deduction you can take this year, and the projected remainder that eventually reaches charity.
Adjust the sliders and every figure updates instantly. Swap in the actual Section 7520 rate published by the IRS in the month you fund the trust — that single number is what the IRS uses to size your deduction, and it changes every month.
How to Use
- Enter the Asset Value Contributed — the fair market value of the cash, stock, real estate, or other asset you plan to transfer. For appreciated long-term assets, the CRT also defers the embedded capital gains, which is often the real reason donors use it.
- Set the Payout Rate. The IRS requires at least 5%, and the projected remainder must still be worth at least 10% of the contributed value (the "10% remainder test"). Higher payouts mean more income now but a smaller deduction and a smaller gift later.
- Choose the Trust Term. A fixed term can run up to 20 years; lifetime trusts use the donor's age and the IRS mortality table, which this model approximates with a year count so you can stress-test the economics.
- Type the IRS Section 7520 Rate for the funding month. This is the discount rate the IRS mandates — it is published monthly and equals 120% of the applicable federal mid-term rate. If you do not know it, 5.0% is a reasonable default for planning.
- Set the Assumed Trust Growth to model how the remainder actually grows. The deduction math does not use this number; it is purely a forward projection of what charity might receive.
- Read the result card from top to bottom: annual payout, total income to you over the term, present value of that income stream, your estimated charitable deduction, and the projected remainder to charity.
The CRT Math in Plain English
Think of it as a three-way split of the asset you put in. The trust owes you (or your named beneficiaries) a fixed annual payout for the term. The IRS computes the present value of that payout stream, subtracts it from the original asset value, and calls the leftover the "remainder interest" — that is the portion that is guaranteed (on paper) to eventually reach charity, and that is the portion you can deduct.
Annual payout = principal × payout rate
Present value of your income stream = payout × [1 − (1 + r)⁻ⁿ] / r
Where r is the Section 7520 rate and n is the number of years. The bracket term is the ordinary-annuity discount factor used in IRS Publication 1457.
Charitable deduction = principal − present value of your income stream
On a $100,000 gift at a 5% payout over 20 years with a 5% 7520 rate, your annual payout is $5,000, the present value of that 20-year stream is about $62,311, and the immediate deduction is roughly $37,689. That is the number you report on Schedule A in the year you fund the trust, subject to the usual AGI ceilings (30% of AGI for cash to a public charity, 20% for appreciated long-term property).
The projected remainder to charity is separate: it simulates the trust balance year by year, letting the assets compound at your assumed growth rate and subtracting each year's payout. At 7% growth, a $100,000 trust paying out $5,000 a year for 20 years is projected to hand charity about $182,000 — more than twice the original gift, because the assets inside the trust grew faster than the fixed payout drained them.
CRAT vs CRUT
There are two flavors, and the calculator defaults to the annuity model (CRAT):
- CRAT (Charitable Remainder Annuity Trust) — the payout is a fixed percentage of the value at funding, set in stone forever. You always get the same dollar amount.
- CRUT (Charitable Remainder Unitrust) — the payout is recalculated each year against the then-current trust value. If the investments boom, your payout rises; if they falter, it falls.
This model uses the CRAT formula because it is deterministic and matches the IRS Pub 1457 annuity factor directly. If you are comparing a CRUT, treat the "annual payout" as year-one and expect it to drift with the trust's portfolio.
Examples
Example 1 — A standard $100,000 CRAT. Donor contributes $100,000 of long-term appreciated stock, picks a 5% payout over 20 years, and the 7520 rate that month is 5.0%. The trust pays $5,000 per year for 20 years ($100,000 total back to the family), the IRS deduction is about $37,689, and at a 7% assumed return charity is projected to receive roughly $182,000 when the term ends. The donor also avoids paying capital gains tax on the embedded appreciation all at once.
Example 2 — Zero payout boundary. If the payout rate is set to 0% (which would fail the IRS 5% minimum in practice but is a useful model check), the entire $100,000 is treated as the remainder, the deduction equals the full principal, and after 10 years at 5% growth the trust has grown to about $162,889 before anything is paid out. This case confirms that the engine correctly treats a 0% annuity as a fully charitable gift.
Example 3 — A $1,000,000 estate-sized gift. On a million-dollar contribution at the same 5% / 20-year / 5% 7520 / 7% growth assumptions, the annual payout scales to $50,000, the immediate deduction is about $376,889, and the projected remainder to charity is roughly $1.82 million. The economics are linear in the principal, which is why CRTs are most common in estate-planning for large, low-basis portfolios.
Example 4 — Shorter 10-year term at 6% payout. On $250,000 at 6% payout, a 4.5% 7520 rate, and 6% growth, the annual payout is $15,000, the present value of the 10-year stream is about $118,691, and the deduction is roughly $131,309. With growth exactly equal to the payout-adjusted drain, the projected remainder lands back near the original principal — a useful sanity check on the model.
FAQ
What is a charitable remainder trust and who is it for?
A CRT is an irrevocable trust that pays you (or a loved one) an income for a term of years or for life, then gives whatever remains to charity. It is most useful for donors who hold highly appreciated, low-basis assets — a concentrated stock position, commercial real estate, a private business stake — and want to diversify without triggering a big capital-gains bill, while also generating an immediate income-tax deduction and a legacy gift.
How is the charitable deduction calculated?
The IRS publishes Section 7520 rates every month. The deduction equals the fair market value of your contribution minus the present value of the annuity or unitrust income stream you reserve for yourself. The present value uses the ordinary-annuity factor from IRS Publication 1457, discounted at 120% of the applicable federal mid-term rate in the funding month. Your actual deduction is final once the trust's paperwork is filed and an actuary signs the remainder factor.
What payout rate should I choose?
The IRS requires at least 5%, and the projected remainder must be at least 10% of the contributed value. A 5%–6% payout is the most common choice: it keeps the deduction healthy and lets the trust grow. A 7%–8% payout gives more current cash but shrinks the deduction and risks eroding the trust principal if returns disappoint. Above roughly 8%, the 10% remainder test can start to fail on longer terms.
Does the CRT reduce my estate tax?
Yes. Assets you place in an irrevocable CRT are removed from your taxable estate, which can save federal estate tax at 40% on amounts above the exemption. The income stream you reserve is still valued in the estate, but the charitable remainder is not. Combined with the step-up planning (or lack thereof) that comes with gifting low-basis assets, the estate-tax savings are often larger than the income-tax deduction itself.
Can my spouse be the income beneficiary instead of me?
Yes. A CRT can pay one or more named beneficiaries for their lifetimes, or for a fixed term up to 20 years. It is common for a couple to name each other as joint lifetime beneficiaries so the income continues for the survivor. After both pass, the remaining assets flow to the charitable beneficiary you named in the trust document.
What happens if the trust investments lose money?
In a CRAT, the fixed annuity must be paid regardless of investment performance, so a multi-year drawdown can slowly drain principal. In a CRUT, the payout recalculates each year against the current trust value, so a down year automatically shrinks the next check. Either way, the IRS deduction you took at funding does not change retroactively — it is locked in the month the trust was funded.
Is this calculator the same number my lawyer will use?
This tool uses the IRS Pub 1457 ordinary-annuity factor and the standard iteration for trust growth, which is the same framework every qualified attorney and actuary starts from. Your final filed number will use the exact 7520 rate for the funding month, the precise term (or IRS mortality table for lifetime trusts), and any additional assets added after funding. Treat this estimate as a planning figure, not the signed actuarial opinion that goes on your tax return.
Disclaimer
This charitable remainder calculator is provided for informational purposes only and does not constitute legal, tax, investment, or estate-planning advice. Deduction estimates are based on the ordinary-annuity factor from IRS Publication 1457 and the inputs you enter; actual CRT deductions require a qualified attorney, CPA, or actuary and depend on the exact funding month's Section 7520 rate, the trust's governing instrument, and your individual tax situation. Projected remainders are hypothetical and are not guaranteed by any investment strategy. Always consult a qualified estate-planning professional before establishing a charitable remainder trust.