Charitable Remainder Trusts

Fidelity offers trust establishment, ongoing administration, and investment support. Services are customized to the needs of the specific trust.

In establishing a Charitable Remainder Trust, a trustor makes an irrevocable contribution, and may be eligible for an immediate partial tax deduction.

The trustor chooses one or more income beneficiaries — one of whom may be the donor — to receive income for life or for a specified number of years.

The trustor names charities to receive the remaining assets upon the last beneficiary's death.

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$250,000 — generally, an initial irrevocable contribution

Charitable Remainder Trusts provide flexibility in creating an income stream that is appropriate for the beneficiaries.

The most distinguishing options are the ability to create an income stream that is a fixed amount (e.g., $5,000 per year) or one that adjusts according to the trust balance (e.g., 5% of value at year end).

Other income variants are available and it is highly recommended that a donor works with a qualified advisor when establishing the trust to ensure that their objectives are appropriately met.

Income received from the trust may be classified as ordinary income, capital gain income, "other income" (usually tax-exempt), and tax-free return of principal — all paid out in that order.

The amount of potential income tax deduction is determined under IRS rules that take into account assets contributed, income payment percentages, the ages and number of beneficiaries, and current federal discount rate.

Long-term appreciated securities contributed to a trust do not generally trigger capital gains tax consequences to the trustor. However, under certain circumstances, a portion of the long-term capital gain on the appreciated asset sold within the trust may pass to the income beneficiaries over time.

Due to the complexity of the calculations involved, donors should contact their advisors for help.

A wide variety of assets can be accepted, including certain illiquid assets, such as real estate and closely held stock.

The ability to accept assets is dependent on how the specific trust is written and on such factors as the income payout needs.

Within limits established by the IRS, a donor may exercise a degree of control over the investment management by serving as trustee.

Under certain circumstances, they may also delegate investment management to a third party, like Fidelity Private Portfolio Service^®, while serving as trustee.

A trustor may select one or more charitable beneficiaries when they establish their trust.

A trustor can designate the Gift Fund as a charitable beneficiary and name future Account Holders, so after the last income beneficiary dies, a Giving Account is set up.

These charitable beneficiaries may be changed if allowed in the trust documents, but may require an administrative expense.

An advisor could help establish the trust, serve as trustee or investment manager, and/or perform administrative services for the trust (such as tax filing).

Because of the complexities involved in establishing and administering trusts, advisors should ensure that they have the appropriate experience or use only qualified advisors.

With our expertise, we can work with advisors in all aspects of establishing and customizing trusts.

A Charitable Remainder Trust requires careful set up and ongoing administration. Fidelity offers expertise in these fiduciary services so that all paperwork and recordkeeping is handled accurately and on schedule.

Fees and expenses vary depending on the specific services required. The trust also will incur investment management expenses as part of their normal operation.