Salvatore M. Capizzi, CEPA, CBDA, is Dunham’s Chief Sales & Marketing Officer with 45 years of financial-services experience. His commentary has appeared on Bloomberg Radio and Yahoo Finance and in Kiplinger, Financial Advisor magazine, and ThinkAdvisor. A 2026 ThinkAdvisor Luminaries and Wealthies finalist, he writes about retirement planning and advanced tax, trust, and estate strategies.
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Salvatore M. Capizzi • Oct 13, 2026
Exit Ramp Strategy for Highly Appreciated Stock Using a Charitable Remainder Trust
Raising assets in the fourth quarter and preparing for additional client contributions during a future bear market could support the growth of your practice. For clients with charitable goals, a charitable remainder trust (CRT), may help diversify highly appreciated stock while providing an income stream, a potential tax deduction, and a future charitable gift. A qualifying CRT generally sells contributed shares without federal income tax at the trust level, though beneficiaries may owe tax on payments they receive. Dunham’s Exit Ramp Strategy establishes and funds the trust in advance using a charitable remainder unitrust (CRUT). A CRUT is a type of CRT that can accept later contributions if its terms permit them, giving clients a structure for contributing additional appreciated stock.
Key Takeaways
A charitable remainder trust, or CRT, lets an investor sell highly appreciated stock without paying capital gains tax at the point of sale.
The charitable remainder unitrust (CRUT) can make payments to the investor for life - and after the lifetime payment term ends, the remaining assets pass to qualified charities
Dunham’s CRT Exit Ramp Strategy establishes and funds a CRUT with at least $500,000. The client can contribute additional stock later if the trust’s terms permit and applicable qualification rules are met.
If I told you that we have essentially been in a bull market since March 9, 2009, you would probably tell me I was wrong.
You would remind me about the COVID bear market in 2020 and the bear market in 2022, and you would be right to bring them up.
But the COVID bear market lasted just 33 days, making it the shortest in history1. The 2022 bear market lasted ninemonths2, which was also relatively brief by historical standards.
So, while buy-and-hold investors may have lost some sleep during those downturns, they have benefited from roughly 17½ years of long-term appreciation.
And this is not just in technology stocks.
We recently created a Charitable Remainder Trust (CRT) for a couple with several million dollars in low-basis O’Reilly Automotive, Inc. (ORLY) stock.
Winter is Coming
In my view, Winter is Coming, and rather than the Night King, White Walkers, and the Army of the Dead, our winter may arrive as a bear waking from hibernation and bring a severe bear market with it.
Now keep in mind that the stock is irrevocably given to the trust, there are fees associated with the creation of the trust, and for the administration of the trust.
In my view, this is financial planning at its finest.
I believe that the volatile markets in the last few months may have left many investors worried about the highly appreciated stocks they own. However, the paradox is that although these are liquid assets, the tax ramifications almost render them illiquid because of the tax due when they sell these shares.
But taxes are not the only factor that keeps investors holding on to these assets. These are stocks that made them millionaires, and for many of them, there is an emotional attachment to them.
Emotional Attachment Bias, Endowment Effect, Confirmation Bias, and Disposition Effect
In behavioral investing, emotional attachment bias occurs when an investor develops a deep psychological attachment to a stock. In our business, we call this "falling in love with a stock."3
That emotional attachment can sometimes blind clients to what is really happening in the market. As a hypothetical example, consider how investors fell in love with Research In Motion (RIM) and BlackBerry after the stock made them a great deal of money. The same lesson may apply to some of the stocks your clients own today.
Source: The Rise and Fall (and Rise Again?) of Blackberry, by Digital Initiative, February 1, 20184
Driven by theendowment effect, they assign an artificial, sentimental value to RIM simply because they own it.5 This creates a dangerous loop of confirmation bias, where they selectively focus on positive news while ignoring glaring fundamental red flags, like the momentum gathering for that company on 1 Infinite Loop in Cupertino, California.6
Ultimately, attached to past peak prices and paralyzed by the disposition effect, the investor refuses to sell even when the asset runs into severe trouble, forgetting the fundamental market truth that the stock does not know or care who owns it.7
This may not be any different than the lessons learned from Kodak, Nokia, Blockbuster, and Sears.
But if winter is coming, what is the Dragonglass and Valyrian Steel you can use to help clients in the event of a large drawdown on their stocks?
What Is The CRT Exit Ramp Strategy?
The CRT Exit Ramp Strategy is a plan to help investors who are tightly holding on to highly appreciated stocks due to taxes and/or behavioral investing bias.
It is a strategy where we use a Charitable Remainder Trust (CRT) for a minimum of $500,000 to open the trust so we can add to it if Winter Comes. This means they can still own a large portion of their highly appreciated stock outside of the trust.
But it gives them an exit ramp for faster future trades. The trade can be done in the time it takes for the stock to be transferred to the trust and for the trustee to sell the stock.
Selling Stock Personally vs. in a CRT
Planning issue
Sell stock personally
Contribute stock to a qualifying CRT
Capital gains treatment
The investor generally recognizes a taxable gain when appreciated stock is sold.
The trust generally pays no federal income tax on the sale. Gains remain tracked within the trust and may become taxable to beneficiaries through later payments.
Access to proceeds
The investor controls the proceeds after accounting for taxes and costs.
The gift is permanent. Beneficiaries receive payments under the trust’s terms and cannot freely withdraw the sale proceeds.
Diversification
The investor can reinvest the after-tax proceeds.
The trustee can reinvest sale proceeds across multiple investments. The trust remains subject to investment risk.
Charitable deduction
Selling stock alone creates no charitable deduction.
A partial deduction may be available for the present value of the charitable remainder, subject to applicable tax limits.
Remaining assets
The investor can retain, spend, give away, or leave the assets to heirs.
At the end of the payment term, remaining assets pass to qualified charities. A donor-advised fund’s sponsoring charity may be named if the arrangement permits it.
Additional contributions
The investor can sell more shares separately.
A CRUT may accept additional contributions if its terms allow. A CRAT cannot accept later contributions.
*Note: General illustration for appreciated stock under U.S. federal tax rules.
The Benefits of the Exit Ramp Strategy
In addition to giving your client an exit ramp if the stock price declines, this strategy can provide several other important benefits:
Eliminates the large capital gains tax at the point of sale
Diversify the concentrated stock position
Create a tax deduction for your client
Provide the potential for tax-advantaged lifetime income
Remove the asset from the estate
Provides a charitable gift to your client’s donor-advised fund or charity
Use life Insurance to replace some or all of the assets going to the charity and use the tax benefits of the CRT to help pay for the premium.
Helping Clients While Strengthening Advisory Relationship
For financial advisors, the CRT Exit Ramp Strategy can also strengthen the client relationship and expand the assets under management. If winter comes and additional appreciated stock is transferred to the trust, the advisor may have more assets to manage in the midst of a bear market.
That can create additional advisory revenue, but only because you are:
Helping the client address the real need of reducing concentration risk
Improving diversification
Managing taxes
Creating income
Building a charitable legacy.
Closing Thoughts
Nobody knows exactly when winter will arrive, and isn’t that exactly the point? The clients who prepare early are the ones who are ready when it does arrive.
An exit ramp strategy using a Charitable Remainder Trust may give your clients a way to protect what they have built, reduce their tax burden, and create a lasting legacy, all without having to guess the top of the market.
Sources
Reuters — Say Goodbye to the Shortest Bear Market in S&P 500 History [reuters.com]
Statista — Bear Markets: How Deep Is Your Loss? [statista.com]
Mission Wealth — How to Manage an Emotional Attachment to Company Stock [missionwealth.com]
Digital Initiative — The Rise and Fall (and Rise Again?) of Blackberry [aiinstitute.hbs.edu]
Investopedia — Understanding the Endowment Effect: Causes, Examples, and Impacts [investopedia.com]
Investopedia — How Confirmation Bias Affects Your Financial Decisions [investopedia.com]
The Decision Lab — Why Do We Tend to Hold on to Losing Investments? [thedecisionlab.com]
Disclosure
This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. Any investment products or services named herein are for illustrative purposes only, and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance.
Federal and state laws and regulations are complex and subject to change, which can materially impact your results.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
All examples are hypothetical and for illustrative purposes only. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues. The solution for an investor depends on their and their family’s unique circumstances and objectives.
Charitable Remainder Trust: Charitable deductions at the federal level are available only if you itemize deductions. Rules and regulations regarding tax deductions for charitable giving vary at the state level, and laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy or completeness of the information provided. Dunham Trust Company cannot guarantee that such information is accurate, complete or timely; and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Although the trust itself is a tax-exempt entity, the trust income distributed to beneficiaries is taxable, according to terms dictated by the U.S. Internal Revenue Code and accompanying U.S. Treasury regulations.
Because the annuity payments from CRATS are fixed and must immediately begin after the creation of the trust, the underlying assets within the structure must be kept highly liquid.
Income tax consequences for the donor can be complex, depending on the individual situation. All or some of the income from the trust may be taxed at ordinary income rates, but part may be taxed at lower capital gains tax rates, or may even be tax-free, for some years.
Dunham Trust Company does not guarantee the completion of the installment note as investments will be subject to market conditions.
Dunham & Associates Investment Counsel, Inc. is a Registered Investment Adviser and Broker/Dealer. Member FINRA / SIPC. Advisory services and securities offered through Dunham & Associates Investment Counsel, Inc., Trust services offered through Dunham Trust, an affiliated entity.
CRT Exit Ramp Strategy for Highly Appreciated Stock | Dunham
