3 Things You Need to Know About CRUTs in New Jersey

A charitable remainder unitrust, or CRUT, can let you sell a highly appreciated asset without paying capital gains tax on day one, collect income for years, and support causes you care about. It can also cost you real money if it's set up for the wrong reasons or without accounting for New Jersey's rules.

Here are the three biggest issues, and how we help solve each one.

1. You can't tell if it actually beats selling

The issue: Tom is 62, lives in New Jersey, and owns $2 million of stock he bought for $200,000. If he sells it himself, federal taxes take about $428,000 and New Jersey takes roughly $193,000 more, leaving him about $1.38 million.

A CRUT lets the trust sell the stock and keep far more invested. At a 5% payout, Tom collects about $100,000 in the first year, and he may get a federal charitable deduction of around $800,000. But the tax still comes through over time in his payments, the remainder goes to charity instead of his kids, and new 2026 rules trim deductions for high earners. (source)

Whether it comes out ahead depends on his age, payout, returns, and how long he lives. Most people decide based on a sales pitch or a rule of thumb.

How we help: we model your options side by side: selling outright, selling in stages, and funding a CRUT, after federal and New Jersey taxes. You see in real dollars which path leaves you, your family, and your charities better off before you commit to anything permanent.

2. New Jersey can tax the trust

The issue: federally, a CRUT pays no income tax when it sells. New Jersey only exempts trusts that exist entirely for charity, and because a CRUT pays you along the way, it doesn't qualify. (source) In June 2026, the New Jersey Tax Court confirmed it, ruling that a CRUT owed state income tax on its gains. (source)

In Tom's case, the trust could owe New Jersey tax on his $1.8 million gain even though it owes nothing federally. And New Jersey generally doesn't allow a state deduction for charitable gifts. Most national articles, and plenty of planners, never mention it.

How we help: we build New Jersey tax into the numbers from the start and work alongside your estate attorney and CPA, so the trust's design and administration account for the state rules before the sale, not after.

3. Once it's funded, mistakes are permanent

The issue: a CRUT is irrevocable. You can't take assets back or pull out extra cash in an emergency, and the remainder goes to charity, not your heirs. Small decisions made at the start stick for decades:

• Timing: the asset has to go in before a sale is legally locked in, or the IRS can still tax the gain to you.

• The wrong assets: S corporation stock and mortgaged property generally don't belong in a CRUT.

• Payout rate: it must be between 5% and 50%, and the projected gift to charity must be at least 10% of what you put in.

• Investing: your payments depend on the trust's value every year, so a poorly built portfolio means smaller checks.

How we help: we help you choose a payout that fits your retirement income, flag timing and asset issues before anything is signed, and evaluate whether to replace your heirs' share with life insurance, without earning commissions on any product. Once the trust is funded, we can manage its investments to support your payments over the long run.

Thinking about a CRUT?

If you're holding a large, low-basis position and want income, tax relief, and a charitable legacy, book a 30-minute call. We'll show you whether a CRUT is worth it before you sign anything permanent. Click here to book a time or find a time that works for you below:

About the author

Michael Walstedt, CFA, CFP®, is the founder of Reliant Wealth Advisory, a fee-only fiduciary firm in Hoboken, New Jersey. He helps business owners, executives, and professionals in the New York/New Jersey area, as well as nationwide, with financial planning and investment management.

Reliant Wealth Advisory is not a law firm and does not provide legal services. This article is for educational purposes only and is not tax, legal, or investment advice. Tax laws and thresholds change, and the right structure depends on your specific situation. Consult a qualified estate planning attorney and tax professional before creating or funding any trust.