If you’re charitably inclined but also want to make the most of your financial legacy, a Charitable Remainder Trust (CRT) could offer the best of both worlds: income for life and a meaningful impact on the causes you care about.
At Platinum Wealth Management of Buckhead, we often explore this strategy with clients who are seeking a way to reduce taxes on appreciated assets while maintaining income—either for themselves or their heirs.
What Is a Charitable Remainder Trust?
A CRT is an irrevocable trust that allows you to:
Donate appreciated assets (like stock, real estate, or a business interest)
Defer or avoid capital gains taxes on the sale of those assets
Receive a steady income stream for life or a set number of years
Leave the remainder to one or more charities of your choice
This structure can be especially effective for investors who hold highly appreciated assets and are looking for both tax efficiency and philanthropic impact.
How Does It Work?
You transfer appreciated assets to a CRT and receive a charitable tax deduction in the year the trust is created.
The trustee (appointed by you) sells the assets without triggering capital gains taxes and reinvests the proceeds.
You or a designated beneficiary receive income annually—either for life or for a fixed term (up to 20 years).
When the trust term ends, the remaining assets go to your selected charities.
Two Types of CRTs: CRAT vs. CRUT
There are two main versions of CRTs:
Charitable Remainder Annuity Trust (CRAT): Pays a fixed annual amount. You cannot make additional contributions once it’s set up.
Charitable Remainder Unitrust (CRUT): Pays a percentage of the trust’s annually revalued assets. This option allows for additional contributions and adjusts with market performance.
Tax Benefits of a CRT
CRTs can offer multiple layers of tax savings:
1. Income Tax Deduction
You may be eligible for an immediate income tax deduction based on the projected value of the amount going to charity (known as the "remainder interest").
2. Capital Gains Deferral
Because the CRT is a charitable entity, it pays no capital gains taxes when it sells appreciated assets. This allows for reinvestment of the full value.
3. Estate Tax Reduction
Assets placed in the CRT are removed from your taxable estate, which may lower estate tax liability for your heirs.
Example: The Tax-Efficient Philanthropist
Let’s say a 60-year-old investor owns a property worth $1 million with a $250,000 cost basis. If sold outright, the capital gains tax would be nearly $178,500. But if she donates it to a CRAT:
She could receive a $50,000 annual income for 20 years.
She would avoid the capital gains tax at the time of sale.
She might qualify for a charitable deduction of nearly $400,000 in the year the trust is created.
Enhancing Your CRT Strategy
You can further customize your CRT to align with other estate planning goals:
Pair it with a Donor-Advised Fund (DAF): Maintain advisory privileges over how the charitable assets are used.
Make the CRT a beneficiary of your IRA: Stretch out required distributions for non-spouse heirs.
Use CRT income to fund a life insurance trust: Replace the wealth donated with a tax-free death benefit for your heirs.
Is a CRT Right for You?
CRTs aren’t one-size-fits-all. They require thoughtful planning, legal structure, and professional administration. At Platinum Wealth Management of Buckhead, we work closely with your estate planning attorney and tax advisor to ensure your trust is designed to support your financial and philanthropic goals.
Interested in exploring if a Charitable Remainder Trust is a good fit for your strategy?
Schedule a complimentary Financial Goal Analysis with our team—we’re here to help you make the most of your wealth, both now and in the future.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.