In this video, we demonstrate how to model Charitable Remainder Unitrusts (CRUTs) and Charitable Remainder Annuity Trusts (CRATs) in the Voyant software. Learn how to incorporate these advanced estate planning tools into your clients’ plans to illustrate gifting strategies and long-term financial impact.
Transcript – Modeling Charitable Trusts in Voyant
In today’s training, I’ll be walking you through how to model charitable trusts in the Voyant software. We’ll start by modeling a charitable unitrust (CRUT), and I’ll create a What-If plan so we can compare it against our client’s current base plan.
Our clients are a couple in their 50s. They have three high-value investment portfolios, one of which is worth $15 million. That portfolio will be the one we move into the trust. I’ll begin by creating the What-If plan, giving it a name, and saving it. Once the plan is created, you’ll see its name in the top right corner.
From there, I’ll click the plus button, select Trusts, and choose Charitable Remainder Unitrust from the trust type dropdown. The grantor will be William, who will fund the trust. This is not an existing trust—it’s a proposal for our clients.
If you ever have questions about any of the fields, remember that hyperlinks in Voyant provide inline help. You can click these for more details on how a setting works and how it affects your trust.
For this example, the term type will be fixed at 20 years. The payment percentage will be 4.5%—this represents the percentage paid to the non-charitable beneficiary based on the value of the trust’s liquid assets at year-end.
For the end-of-term option, I’ll choose Liquidate to Donor Advised Fund. If you choose Liquidate, assets simply exit the plan to a charitable beneficiary. Liquidating to a donor-advised fund requires that you have one already created in the plan to link. I’ve already created one for this example.
The non-charitable beneficiary will be Bianca, William’s spouse, who will receive the 4.5% payouts at the end of each year during the 20-year term. I’ll click Done to save.
Next, we need to fund the trust. I’ll go to Transfers, set the destination as the CRUT, and the source as the chosen investment account. I’ll select All Available for the amount, set the transfer to occur at plan start, and click Done.
Once funded, payouts should begin in year two, flowing to Bianca as other income in her personal cash flow. The amount—starting at $712,000—will vary each year based on the trust’s value. In Year View, this appears as a trust payout from the CRUT to Bianca.
If you want to verify the tax advantages in year one, go to Taxes and look under Federal Taxable Income to see the deduction from their taxable income. You’ll also see the charitable cash donation carryover in the summary and can scroll down to review a dedicated section mapping the trust’s taxation.
At the end of the 20-year term, the payments to Bianca stop, and the donor-advised fund is funded with the trust’s remaining assets. This is visible under Investments as a large contribution from the charitable remainder trust into the donor-advised fund.
Now let’s create a charitable remainder annuity trust (CRAT) so we can compare the two. I’ll return to the base plan, create another What-If scenario, and select Charitable Remainder Annuity Trust from the trust type list.
The grantor will again be William. This time, I’ll make it a lifetime trust, which will term out at the mortality of the non-charitable beneficiary. The payment will be a fixed annual amount of $250,000 to Bianca. At the end of the term, the trust will be liquidated to the charitable entity.
I’ll fund the CRAT from the same investment account, again selecting All Available at plan start. Once saved, the $250,000 payments will continue each year until Bianca’s mortality.
To compare outcomes between the CRUT, CRAT, and base plan, go to Overview and then Legacy. Here, you can see the federal estate tax outcome, total wealth transfer after tax, and compare different plans side-by-side. This allows you to determine which trust type might provide the more advantageous outcome for your clients.
This has been a high-level overview of demonstrating charitable trusts in Voyant. If you’d like help walking through a specific case, contact us at support@planwithvoyant.com. You can also click your client’s name in the top right corner, request support, enter your question, and share client access for personalized assistance.