Thinking about a charitable remainder trust after an IPO or acquisition?
by Malik Amine
Quick note
This isn't tax, legal, or charitable-planning advice. A CRT can't be undone once it's set up, so please don't set one up because of a blog post.
Why it comes up
After a big vest, an IPO, or an acquisition, people hear that putting appreciated stock into a charitable remainder trust can lower their taxes and pay them income, with whatever's left going to charity. That leaves a lot out: whether you actually want to give to charity, the payout rules, what the trust costs to run, and whether your trading policy even lets you move the shares.
A CRT isn't a donor-advised fund
A donor-advised fund is a charitable account you open with a sponsoring organization. A CRT is a trust that pays you (or someone else) for a period of time, and the rest goes to charity at the end. People use the names interchangeably, and that's how you end up signing the wrong documents.
RSUs you just got aren't the same as old founder shares
RSUs that just vested were taxed as regular income when they vested. That's a very different starting point from founder or early-employee shares you've held for years that have gone up a lot. Most of the CRT stories you hear at dinner assume the second situation. Even founders need an attorney and a CPA to confirm which one applies to them.
Questions for your attorney and CPA
- Do you actually want to give to charity, or is this only about the tax bill?
- Does your trading policy let you transfer the shares?
- What do you own besides this one stock?
- Which charities would get what's left, and would there be a meaningful amount left for them?
Answer those first. None of this means you should set up a trust.