A charitable remainder annuity trust fulfills two missions: It gives wealth to a beneficiary and to a charity, at differing times. This unique type of trust is specifically designed for high net worth individuals who want to take care of their family members while still ensuring that assets ultimately go to charities.
During the life of the trust, the trust will hold assets that have been given over by a donor. The trust will pay out money to a beneficiary throughout. Once the trust expires, the charity will become the owner of the asset.
Because the trust holds assets separately from the donor, and the trust cannot be revoked, the trust will need its own tax ID (also known as an employer identification number). The donor cannot take the trust back or change the terms of the trust (at least, not without negotiating with all other parties). Thus, the donor does lose control over the asset they have given permanently, but they have the peace of mind knowing that their beneficiary will gain income from the trust for some time in the future.