Charitable Remainder Trusts: Giving with Purpose, Planning with Precision
For those looking to give back while still meeting personal financial needs, a charitable remainder trust can be a powerful tool. It’s one of the few strategies that allows you to support the causes you care about, receive income during your lifetime, and reduce your tax burden all at once. Done right, it can serve as both a financial instrument and a legacy.
At Fletcher Estate Planning, we help clients think beyond the basics. Here’s how a charitable remainder trust works, and why it might deserve a place in your estate plan.
What Is a Charitable Remainder Trust?
A charitable remainder trust, often referred to as a CRT, is a type of irrevocable trust that provides income to you or another beneficiary for life, or for a term of years, and then passes the remaining assets to a designated charity.
You decide what goes into the trust. You decide who receives the income. You decide which organization benefits when the trust ends. And once it’s set up, the trust takes over — holding and managing the assets while executing your instructions.
How a CRT Functions in Practice
You start by funding the trust.
This could be real estate, appreciated stock, cash, or other assets. Once transferred, those assets belong to the trust, not to you personally.
You choose how the income is paid out.
Some people want a fixed dollar amount every year. That would be an annuity trust. Others prefer a percentage of the trust’s annual value, which varies with performance. That would be a unitrust.
At the end of the term, the remainder goes to charity.
The organization you name receives whatever is left in the trust. It could be a local nonprofit, a national charity, or a foundation you support. It’s your choice.
Why People Choose Charitable Remainder Trusts
There are tax benefits.
Once you transfer assets into a CRT, you may receive a charitable income tax deduction based on the value of the future gift to charity. In many cases, you also avoid immediate capital gains taxes on appreciated assets. That alone can create significant financial advantages.
You keep an income stream.
While the ultimate goal is to give to charity, a CRT allows you to retain income during your lifetime. That makes it especially useful for individuals who want to give — but not give everything away all at once.
You can diversify your portfolio more easily.
Transferring appreciated assets into a CRT and then selling them within the trust allows for reinvestment without triggering capital gains. This gives you more flexibility and can improve long-term financial stability.
You leave a legacy.
A CRT supports charitable work that reflects your values. It creates impact that lasts, and it can serve as a model for future generations within your family.
It’s adaptable to your needs.
Whether you want predictable income or a variable stream tied to market performance, the trust can be structured accordingly. It’s not one-size-fits-all. It’s highly customizable.
What to Keep in Mind
The trust is irrevocable.
Once you set it up and fund it, you can’t take the assets back. That’s what makes the tax benefits possible, but it also means you need to be sure before moving forward.
You need to choose your charity wisely.
Not every organization qualifies for CRT distributions. Make sure the charity meets IRS standards and is aligned with your values. This is not just a financial decision. It’s a personal one.
There are legal and administrative responsibilities.
CRTs require proper drafting, ongoing trust administration, and annual filings. Trustees must follow IRS rules and manage the trust responsibly. This is not something to handle on your own.
You should work with qualified professionals.
Setting up a CRT involves estate planning law, trust design, and tax strategy. It is essential to work with an attorney and financial advisor who understand how all the moving parts work together.
Final Thoughts
A charitable remainder trust can help you balance generosity with long-term security. It’s a strategy that serves both your future and the future of others. For the right person, it creates a win-win — financial benefits for the donor, lasting impact for the cause.
At Fletcher Estate Planning, we guide individuals and families through these decisions with care and clarity. If you are thinking about incorporating charitable giving into your estate plan, or if you simply want to understand your options, we are here to help you take the next step.
Schedule a consultation with our team today. Let’s talk about how to build something meaningful — for yourself, and for others.
