Webinar Transcript (2/26/2026): How to Shift CRT Benefits to Children Under Today’s Tax Rules
Host: Jonathan I. Shenkman, President & Chief Investment Officer of ParkBridge Wealth Management (Contact: jonathan@parkbridgewealth.com)
Panelists: Evan Unzelman, CEO, CRT Experts, LLC (Contact: evan@crt-experts.com)
Jonathan Shenkman: Good morning, and welcome to the Park Bridge Wealth Management Winter Webinar Series. This program is entitled, How to Shift CRT Benefits to Children Under Today's Rules. As always, my name is Jonathan Shankman, I'm the president.
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Jonathan Shenkman: and Chief Investment Officer of Park Bridge Wealth Management. And in that role, I serve in a fiduciary capacity to help my clients achieve their financial objectives.
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Jonathan Shenkman: The goal of my programs is to bring professionals together to help them better serve their clients, and this is done by educating attendees on the latest topics in wealth planning, and by encouraging collaboration between a client's attorney, CPA, and financial advisor where appropriate.
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Jonathan Shenkman: My practice focuses on working with high net worth families, businesses, and non-for-profits. I manage individual investment portfolios, trust accounts, corporate retirement plans, and endowments.
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Jonathan Shenkman: to help my clients achieve their financial goals. In addition to the 20 or so events I run every year, I also do a fair amount of writing on the topics of investing and financial planning, and you can read my work in a variety of periodicals, including Barron's, CNBC,
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Jonathan Shenkman: Forbes, Kiplinger, The Wall Street Journal, and Trust and Estates Magazine, to name just a few. You can see all my work on my website at parkbridgewealth.com forward slash articles.
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Jonathan Shenkman: or by following me on social media at Jonathan on Money. Additionally, you can check out my weekly podcast, which is also called Jonathan on Money, and you can listen to that on Apple, Spotify, or wherever you get your podcasts.
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Jonathan Shenkman: Finally, I recently published my first book, D is for Diversification, The ABCs of Personal Finance, which can now be purchased on Amazon or at jonathanOnMoney.com.
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Jonathan Shenkman: Today, we're privileged to hear from Evan Unzelman, CEO of CRT Experts LC, based in Leesburg, Virginia, and Evan has over 20 years of specialized experience with Charitable remainder trusts, and is largely regarded as one of the nation's foremost experts on CRTs. Over the last two decades, he has reviewed thousands of CRTs.
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Jonathan Shenkman: And work with tens of thousands of CRT beneficiaries, their families, and their advisors on all facets of CRT planning.
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Jonathan Shenkman: From upfront design to complex CRT administration to CRT secondary planning, Evan provides unique insight at every stage of the CRT life cycle. And Evan's experience with CRT secondary planning, such as sales, gifts, and exchanges of CRT income interest, is particularly deep.
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Jonathan Shenkman: Prior to forming CRT Experts, he was president of a charitable planning firm where he helped develop the secondary market for CRT income interests, and personally oversaw the successful completion of the sale transactions for thousands
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Jonathan Shenkman: of CRT beneficiaries across the U.S. Evan is a trusted resource for trusts and estate attorneys, CPAs, and financial advisors on all aspects of CRT planning. And today, Evan will be speaking on how to shift CRT benefits to children under today's tax rules, and with that introduction, I'll now turn the program over to Evan.
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Evan Unzelman: Thank you, Jonathan. It's great to be here, and appreciate the opportunity to talk about what's turning in to be quite a timely topic, which is shifting CRT benefits to children under today's tax rules. Before we talk about the techniques.
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Evan Unzelman: It's important to understand why this conversation is happening more often today than it did 10 or 15 years ago. We'll look on the next slide at the age distribution of the existing CRTs in existence today.
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Evan Unzelman: But as we'll see, a majority of CRTs, most CRTs in existence were created in the 1990s and early 2000s. So we are 20-plus years out from the time when most CRTs out there were created.
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Evan Unzelman: And…
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Evan Unzelman: the… what's significant about that is the individuals who created them, when we think about, typically, when we create a CRT, we're in our, you know, 50s, 60s, we fast-forward 20-plus years, these clients are now in their 70s, 80s, and beyond.
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Evan Unzelman: So, the… typically, when we think about a CRT, this is a long-range planning vehicle, because it's, you know, the income stream is tied to people's lifetimes, so at inception, it is. But the marketplace today, given the age of the outstanding CRTs that represent
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Evan Unzelman: The… most of the marketplace.
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Evan Unzelman: The opposite is true. These are relatively short-duration assets tied to aging beneficiaries, and that just changes the planning dynamics
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Evan Unzelman: When we think about why do clients create CRTs, it's typically for two reasons. One.
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Evan Unzelman: We have appreciated property, we want to sell that, and we want to defer the capital gains tax. That's the driver behind most CRT creations, is that. It's that tax driver of deferring the capital gain. And then secondly, we want to create a lifetime income stream.
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Evan Unzelman: When you think about the timing of those benefits, it's anything but equal. The tax benefits.
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Evan Unzelman: are garnered really early in the life of the CRT, using the first year or two. That's when we defer the capital gain, the exempt trust sells the asset, and if we take, or at least start taking the charitable deduction that we get.
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Evan Unzelman: And we can carry that forward for, at most, 5 years. So, from a relatively early point in the overall CRT life cycle, really the benefit, the sole benefit with respect to that trust is that income stream.
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Evan Unzelman: And today, for these clients, because we're so far removed from the CRT inception, from creating the trust, that income is just no longer a priority.
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Evan Unzelman: And more importantly, their planning goals have shifted to children and grandchildren. Their children are also 20-plus years older, in a very different spot in their lives, and their grandchildren, in many cases, weren't even born when these CRTs were created.
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Evan Unzelman: So, in short, the trust is still functioning exactly as drafted. It's irrevocable, it has to, right? That trust can't change.
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Evan Unzelman: but it's no longer functioning as desired. So the question becomes, you know, if the economic value of that income interest that the client owns is no longer in alignment with their goals and objectives today, what can be done with it? And that's what we'll examine here today.
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Evan Unzelman: So, this sort of sets the stage for the discussion. What you're looking at is the age distribution of existing CRTs. This is based on the most recent IRS data released on split interest trusts, charitable lead trusts, charitable remainder trusts.
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Evan Unzelman: There's about 90,000 CRTs out there. So this is… this is… there is a lag on it, it's not a significant lag. This is based predominantly on 2022, split interest trust tax returns, the Form 5227 that, CRTs file.
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Evan Unzelman: And so when we look at the age of the marketplace, we break it down into 5-year increments here.
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Evan Unzelman: And you can see in the most recent 5 years, so this is as of tax year 2022, so 2018 to 2022, only 5% of the CRTs in existence were created in that time frame. We back… we go back to the prior 5 years, it's only 12%. So, as you move down the chart, you can see something very telling.
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Evan Unzelman: In that, you know, 30% of CRTs that are out there today were created between 1998 and 2002, 28% before 1998, most of those were in the 1990s.
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Evan Unzelman: So, 58% of the existing CRTs are more than 20 years old. That just shows you how many CRTs were created in the 90s and early 2000s, that, you know, a lot of the CRTs that were created are no longer in existence. The income beneficiaries have died. If they were term trusts, they've termed out.
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Evan Unzelman: But there are just so many created back then that it still represents those CRTs that are left still represent, the majority of the marketplace. So more than half the CRT universe
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Evan Unzelman: was created in a completely different planning environment. We think about the time when these trusts were established.
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Evan Unzelman: We had an estate exemption of, or $600,000 to $1,005. We had a 28% capital gain rate, so it was just a different planning environment, but more importantly.
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Evan Unzelman: these clients are just in a different spot now. They're 20-plus years older, so these CRTs were perfectly rational decisions when they were created.
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Evan Unzelman: But what we're evaluating today is not whether the CRT was a good decision at inception, it usually was.
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Evan Unzelman: What we're asking is a different question. We're asking, given how much time has passed.
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Evan Unzelman: Does that original economic structure, those original terms that are irrevocable, still align with the client's objectives today?
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Evan Unzelman: So we think about these clients today, generally speaking, these clients 20-plus years later, their balance sheets are stronger. In many cases, they don't need that CRT income anymore. In many cases, it's not just they don't need it, it's they don't want it. They're trying to reduce their taxable income, not maintain or increase it, and…
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Evan Unzelman: their children are adults, their grandchildren, again, grandchildren that may not have existed when the CRTs are created, are now the focus of their planning.
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Evan Unzelman: So their planning goals have shifted.
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Evan Unzelman: But the trust is irrevocable. It can't shift along with those, those changing, the client's changing circumstances.
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Evan Unzelman: We'll go back to the Brewers, Bill and Sandy, later when we look at a case study. But I… their situation, and we… we helped write an article for Kipling Gerd with their attorney on this particular client, because this really does typify the CRT life cycle.
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Evan Unzelman: and is representative of all these CRTs out there today, where really good fits at inception, but the issue with the CRT is it's an irrevocable trust.
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Evan Unzelman: And it's around for a really long time, and that combination of irrevocable trust and a long duration can just naturally lead to misalignments later in that CRT life cycle. As the client's life starts to change, it's inevitable that trust can't flex.
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Evan Unzelman: Because it's irrevocable, can't flex along with the client's changing lives. So, you've got all these clients out there today asking.
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Evan Unzelman: you know, what can we do here? And unfortunately, many of those clients don't think that anything is possible. And that, I think it creates a very specific opportunity for advisors. You have a large population of mature CRTs producing taxable income that's no longer needed.
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Evan Unzelman: held by clients whose priorities have evolved, so the conversation becomes, you know, if the CRT were being created today, with today's facts and the client's objectives today, would we design it the same way? And if the answer is no, and as you would imagine it often is, then we have a planning discussion.
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Evan Unzelman: So, before we look specifically at the sale and rollover options, let's first answer sort of this threshold question of.
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Evan Unzelman: why does this flexibility exist? Why can't we do what we're gonna talk about here today? And we're going to see these are, with the sale and the rollover.
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Evan Unzelman: Different… very different options in terms of the outcomes, but they're rooted in the same thing, and that is… is the fact that the income interest in a charitable remainder trust is a capital asset.
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Evan Unzelman: And so this, this roots back to a 1972 revenue ruling, you can see up here on the screen. What that revenue ruling says is that an income interest in a trust, not just a CRT in any trust, the life interest in a trust.
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Evan Unzelman: is a capital asset. So any CRT out there that's been in place for more than a year, the income interest holder, the income beneficiaries own a capital asset that can be bought and sold.
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Evan Unzelman: at the long-term capital gain rate, or can be used to create a new CRT. The problem is, there's just not enough awareness out there from the client's standpoint that these options are even available to them.
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Evan Unzelman: So as a capital asset, we view it like a capital asset. That's what gives rise or gives us the flexibility to do what we'll talk about here today. Again, very different outcomes, but they're rooted in that capital asset treatment.
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Evan Unzelman: So once we understand that, that an income interest is a… a CRT income interest is a transferable capital asset, that is what gives us primary… two primary planning paths.
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Evan Unzelman: The first is a sale. With the sale, the income beneficiary transfers their entire income interest to a third-party purchaser. This is a full disposition of the income interest. The client, the seller, receives immediate liquidity. Importantly, this does not affect the trust.
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Evan Unzelman: The trust is irrevocable, it's not affected by the transaction. The underlying terms are the same.
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Evan Unzelman: The measuring lives are the same, the charitable remainder is… that stays intact. It's only that income stream that's changing hands, that capital asset.
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Evan Unzelman: And this is, of course, going to be appropriate for any client with a CRT who wants liquidity, but in our context here today, where these clients are looking to shift the future economic benefit of their trust to kids.
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Evan Unzelman: That's… in our context, when we're talking about those clients, it's… it's providing cash that they can redeploy for heirs, for grandchildren and their children.
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Evan Unzelman: So the second option is what we call a rollover.
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Evan Unzelman: So instead of selling the income interest for cash, the beneficiary can contribute that to a newly
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Evan Unzelman: created CRT.
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Evan Unzelman: So this is a ground-up build, a blank slate when we talk about that new CRT. So the client's attorney is drafting that new CRT per their goals today. And for the clients that we're talking about here today, that means we're drafting a CRT here, we're creating this CRT for the benefit of children.
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Evan Unzelman: And we're going to monetize, fund and monetize that CRT with our income interest. So, at a high level, really different outcomes. The sale is converting that income interest to cash to redeploy for children.
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Evan Unzelman: The rollover option is redeploying that via an income stream from a new CRT. So they're both grounded in that capital asset treatment, but they accomplish different objectives, as we'll see.
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Evan Unzelman: So let's look first, more closely, at the sale option. So when a beneficiary sells their CRT interest, they're converting the right to future distributions into a lump sum cash payment.
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Evan Unzelman: For the seller, there's no more ongoing income recognition.
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Evan Unzelman: There's no more ongoing administration. For these clients who are older, we're talking about here today, that second point there, no more ongoing administration, I can't overstate that. Obviously, the goal here with the sale is liquidity that they can redeploy for their heirs.
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Evan Unzelman: But it's probably a majority of the sellers that we work with at some point tell us, you know, a really nice side benefit here is I get to get rid of this administration.
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Evan Unzelman: With the sale, there's a change of trustee. The administration is going to shift over to the buyer.
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Evan Unzelman: And for these clients who are at the point in their lives where they're trying to simplify their financial affairs, that administrative simplicity is a real benefit. But the core benefit, the key benefit is, of course, cash that they can redeploy for their heirs.
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Evan Unzelman: Before we jump into the case study and look at the Brewer CRT, just an important point on CRT, the sale of the income interest we're talking about here today, which is a secondary market sale versus a CRT termination. So with a termination or a commutation.
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Evan Unzelman: The… which is a division of the trust between the income and charitable remainder beneficiaries
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Evan Unzelman: The… the valuations there are… are done strictly under Section 7520 and the methodology under Section 664-4, i.e, this is a formulaic valuation.
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Evan Unzelman: Whereas with the secondary market sale, we're not bound by, because we're not terminating the trust, we're not bound by those, by those, by those valuations. And what we've, in 20… almost 25 years now of doing these transactions, what we've seen is, if we go price and income interest.
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Evan Unzelman: In the real world, and real-world buyers are pricing those based on their own assumptions, it's typically going to price at a relatively significant premium to what the client would get if they terminated the CRT. So, that's why, as long as the clients are made aware of the sale, rarely do we see, see those terminations anymore.
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Evan Unzelman: Conceptually, think of it like… like real estate, like another… like another capital asset. We think about real estate, there's a… there's a government value, that assessed value.
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Evan Unzelman: Typically, if we go, sell that, list our property, and sell it in the real world, we're gonna get more than that government value, and that's… that's… that's analogous to, the sale mark… the market value of a CRT income interest versus, that termination value.
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Evan Unzelman: So let's put some real-world framework around this with our case study and Bill and Sandy Brewer. Again, real typical, very, very, very typical in terms of the fact pattern that we see with these CRTs that were created back in the 90s and early 2000s. We had appreciated real estate, they owned appreciated real estate, they wanted to sell that, defer the capital gain.
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Evan Unzelman: At that time, their kids were high school aged, so they had, you know, private schools, and travel sports, and a big house. They were looking for income. They had an expensive lifestyle, and so the CRT was a perfect fit. It allowed them to defer that capital gain.
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Evan Unzelman: And then it, it, it, distributed income, over their, over their, remaining lifetime. So, that is 7% crut.
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Evan Unzelman: And so, it worked really well.
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Evan Unzelman: like a lot of these clients, they eventually got to the point where their lifestyle got much simpler. They're trying to…
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Evan Unzelman: decreased their taxable income, and their advisors were able to pretty much do that across the board, from their investment portfolios, real estate holdings, and really down to this one last asset, and that was this income interest in this CRT, and they… and they wondered, well, what can we… what can we do with this? We don't need this income.
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Evan Unzelman: What can be done?
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Evan Unzelman: And so their advisors approached us, we reviewed the CRT, eventually sold their interest, but what I want to do here is walk through the valuation, so we can get an idea of, you know, given a CRT here.
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Evan Unzelman: 78- and 76-year-old, $2.5 million in the trust, 7% payout rate.
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Evan Unzelman: this was not an MCRUT, this was just a standard CRUT. You know, how does that price? And ultimately, that income interest, that's the economic value that we're shifting to the next generation or generations, and so I wanted to walk through that here, here now.
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Evan Unzelman: So when we're valuing a CRT income stream, it's not a complicated valuation. There's just two key variables. One is the duration.
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Evan Unzelman: So, because most CRTs are tied to people's lifetimes, most often, we're just going to be using mortality tables. We use… we'll look usually at 3 here at CRT Experts. In this case, it gave us joint life expectancies for Bill and Sandy of
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Evan Unzelman: 15, 17, and 19 years. So what that does is it puts a present value range, a range, a valuation range, because obviously the value of that income stream at a 15, 17, and 19-year duration, it's going to be a little bit different.
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Evan Unzelman: The second thing we need to… we need to estimate is the trust growth rate moving forward. With a 7% trust.
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Evan Unzelman: We're always going to go based on what the clients or advisors, if they have views toward what they would want to use. Otherwise, by default, we're just going to peg that future growth rate to the trust distribution rate.
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Evan Unzelman: That way, we get just a level stream of payments. So we assume that, in this case, the… the trust is earning net of fees, 7%, distributing 7%, so we've got this $175,000 annual income stream.
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Evan Unzelman: And we look at that at those three valuations. We look at that at 15, 17, 19 years, and as you can see, that puts a range on that income interest, from anywhere from just under 1.6 to just above $1.8 million.
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Evan Unzelman: So that's our first, and that's our most realistic benchmark. We will look at that IRS valuation.
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Evan Unzelman: This is, that formulaic valuation that I… I mentioned earlier. If any of you use Crescendo, you're… this will look familiar. This is their… their output, Crescendo Interactive Software. But whatever we're using, Easy Charitable, Number Cruncher, Tiger Tables, we're gonna get the same value… we're gonna get the same valuations, because it's… we're using that IRS interest rate.
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Evan Unzelman: The IRS is using their own mortality tables, 2010CM.
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Evan Unzelman: We plug in the ages, payout rate, trust value, and that will give us two values. One would be the value of the charitable interest. The remainder interest, which we can see here, is $976,000.
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Evan Unzelman: Bill and Sandy set up the CRT today. That would be the deduction that they would get, based on the current value and their ages today. We're not interested in that value, we're interested in the other value, which is the IRS value of the income interest, which you can see is about $1,52.
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Evan Unzelman: So…
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Evan Unzelman: you can see here, now we can start to put that valuation range. We're looking at different economic benchmarks. We can then obtain a secondary market price estimate. In this case, and they eventually sold their income interest for about $1,85,000.
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Evan Unzelman: And this is… this is, indicative. This is illustrative of… of where these will typically price
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Evan Unzelman: right around the top end of that valuation range, and you can see that IRS value is below even the bottom of that present value range, so you can see why, if the client's goal is the flexibility of cash.
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Evan Unzelman: And they want the most money possible, the sale option is gonna do that for them.
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Evan Unzelman: So, for Bill and Sandy, to go back to that life cycle slide.
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Evan Unzelman: for them, this… the sale brought their… their… sort of their… their CRT journey, if you will, to a satisfactory conclusion. Certainly, they had no qualms about the trust. It worked masterfully up front.
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Evan Unzelman: it worked really well over time. It was just… it had run its course, is something that we hear from a lot of sellers, and the sale allowed them to do that. Now.
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Evan Unzelman: Bill and Sandy, they wanted the flexibility of the cash. They had real specific things they were looking to do for their… for their kids and grandkids. But on paper, they really were also good fits for a CRT rollover.
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Evan Unzelman: the… when we're talking about this subset of clients, the overarching goal is the same. It's, I want to shift the remaining financial benefit from my trust to my… my heirs.
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Evan Unzelman: So that's the overarching goal. So, as we're ticking the boxes to get to that goal, the sale and rollover are… the clients are the same, right? These clients, in both cases, they don't need that or want that taxable income.
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Evan Unzelman: They're looking for a way to shift the remaining benefit to their kids.
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Evan Unzelman: Where the sale and the rollover, where the differences play a role is here. When we reach this decision node, okay, we know we want to shift that benefit. How do we want to do it? With the sale, the big benefit, of course, is the flexibility of the cash, but that is capital gain.
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Evan Unzelman: So, with the sale, this is a capital transaction, you're selling a capital asset, so the proceeds are long-term capital gain property.
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Evan Unzelman: With the rollover, we don't have the flexibility of cash, but we can take that capital gain out of the equation for, in this case, Bill and Sandy. So with the rollover, and this is the way a lot of… we hear a lot of clients describe it as, you know, my kids are now of the age
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Evan Unzelman: that we were, my spouse and I were, when we set up this trust. It worked really well for us.
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Evan Unzelman: I'd love just to do the same thing for the kids. And that's, in effect, what the rollover is able to do. So, instead of Bill and Sandy selling that income interest for cash, they create a new CRT,
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Evan Unzelman: Name their children as the… and grandchildren as the income beneficiaries.
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Evan Unzelman: irrevocably contribute their income interest to the new CRT, and that will sell it. You know, the buyer doesn't care who they're buying the old income interest from. They're gonna pay $1,85 whether Bill and Sandy own it, or this new CRT owns it.
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Evan Unzelman: But the key difference here, obviously besides the fact that the objective is being accomplished via income to the kids, the key difference in these two options is there's no capital gain to Bill and Sandy.
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Evan Unzelman: So the seller is the new trust. So it's really… it's similar when they set up their CRT, they owned this real estate, they had two cho… well, more than two, but the two relevant choices were, I can sell this income interest for cash and pay the capital gain.
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Evan Unzelman: or I can contribute it to this new CRT. We've just got another capital asset now, 20-plus years later. Their income interest in that old CRT, they can sell it for cash.
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Evan Unzelman: or they can contribute that to a new CRT for, in this case, for their kids and grandkids. So, it's the same economic value.
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Evan Unzelman: It's that $1,85, that's what we're shifting down to that next generation. We're just going about accomplishing that objective, differently. With the sale, that $1,85 is cash in Bill and Sandy's bank account, and they can redeploy that however they want.
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Evan Unzelman: In, in their case, again, they did, I think they did some… they did immediate gift, they invested in a child's business, and then they did some college funding for their grandkids, so the cash gives them the flexibility to do that.
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Evan Unzelman: With the rollover, that $1,85, that economic value is being dropped into a new CRT. So we're maintaining the tax-exempt environment, and that new CRT will distribute income to the children.
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Evan Unzelman: So there's no tax, doesn't come into the picture until that… until the distributions are going out, to their kids. Of course, those are taxable at that time.
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Evan Unzelman: So, same economic value, different planning, structure, and a different, different outcome for the clients.
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Evan Unzelman: So hopefully this is a lot to pack into, 25-30 minutes, but, hopefully this has been a good overview for everyone.
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Evan Unzelman: Obviously, if you have, you know, clients for whom you think this may be appropriate, please get in touch with me. We do not charge a review of CRT, we don't need any documentation. We just need ages, payout rate, approximate trust value, and we can put this review together. That's really where it starts from the client's standpoint, is awareness. We've been…
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Evan Unzelman: beaten this drum now for almost 25 years in terms of trying to get the awareness down to that client level, that their income interest in the trust, that's a capital asset. They've got much better flexibility than they think they might think they have.
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Evan Unzelman: And so it really starts with that review, and of course, if the client's interested in pursuing these options, we're happy to assist. But CRTs are all we do here, so even if you just have a general question about CRTs, CRT designs, CRT administration, or what we talked about here today, we're always happy to kick that stuff around. But Jonathan, really appreciate the opportunity to come on today and talk about
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Evan Unzelman: hopefully what I've demonstrated here is a timely topic.
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Evan Unzelman: When it comes to clients with existing CRTs.
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Jonathan Shenkman: Great, and thank you so much, Evan. And if anyone's any specific questions, new business opportunities, or any other issues I'd like to discuss.
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Jonathan Shenkman: You can feel free to reach out directly to Evan or myself where appropriate, and I'll be sure to include his contact information in the follow-up email to this program as well. Three more quick items before I let you go today. First, my next webinar is on Thursday, March 12th, on highlights of the 2026 Heckerling Institute on Estate Planning, featuring Kevin Matz, who's a partner at Aaron Fox Schiff, LLP, based in New York.
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Jonathan Shenkman: And I'll be sure to send out the invitation to this program in the coming days. In the meantime.
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Jonathan Shenkman: If you have a friend or colleague who'd find these webinars of interest, they can subscribe to my webinar distribution list by simply emailing me with the word webinar in the subject line. My email is jonathan at parkbridgewealth.com.
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Jonathan Shenkman: Second, you can follow all my work on X and Instagram at Jonathan on Money by connecting with me on LinkedIn. You could also listen to my weekly podcast called Jonathan on Money, which is available on Apple, Spotify, or wherever you get your podcasts. And you can watch my practical planning videos, which I post several times a week, by following me on YouTube at Jonathan on Money as well. And third, please take 30 seconds to fill out my survey at the end of this program. It helps me improve my webinars and provide timely and interesting content
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Jonathan Shenkman: attendees, I thank you in advance for that. And with that, this concludes today's session. Please stay safe and healthy, and have a wonderful day, everybody.