At Palmer & Slay, PLLC, we help individuals and families across Mississippi make estate planning decisions with purpose. For those who want to support charitable causes while also meeting their own financial needs, a Charitable Remainder Trust (CRT) offers a unique solution. This type of trust can provide income during your lifetime, reduce taxes, and ensure that the remainder of your assets benefits the organizations you care about.
What Is a Charitable Remainder Trust?
A Charitable Remainder Trust is a type of irrevocable trust that allows you to support a favorite charity while also receiving income for yourself or someone you choose. After the income term ends, whatever remains in the trust goes to the charity you’ve named.
There are two main types of CRTs:
- Charitable Remainder Annuity Trust (CRAT): Pays a fixed income each year.
- Charitable Remainder Unitrust (CRUT): Pays a percentage of the trust’s value, recalculated annually.
Both types offer a way to convert appreciated assets, such as stocks or real estate, into ongoing income without incurring an immediate capital gains tax.
Why People Choose CRTs
A Charitable Remainder Trust serves multiple goals at once. You can create a lasting charitable legacy while also supporting your financial well-being and that of your family. Reasons people choose CRTs include:
- Reducing capital gains tax after selling appreciated assets.
- Generating retirement income from low-yield investments.
- Reducing the size of a taxable estate.
- Supporting a charitable organization in a meaningful way.
- Converting non-income-producing property into a reliable income stream.
You may want a steady income during retirement or a way to support loved ones while planning for long-term giving. With the right structure, a CRT can do both.
How a CRT Works in Practice
Here’s how a CRT typically works:
- You transfer an appreciated asset, like real estate or stock, into the trust.
- The trustee sells the asset and reinvests the proceeds in income-producing investments.
- The trust pays income to you, your spouse, or another beneficiary for life or up to 20 years.
- After the income term ends, the remaining trust assets go to one or more charitable organizations you’ve named.
You can act as your own trustee, or you may choose to appoint a bank, trust company, or other professional to manage the assets. We’ll help you evaluate your options to ensure the trust is properly managed.
Who Can Receive Income and When
The trust can pay income to:
- You
- Your spouse
- Children or other loved ones
The income can last for your lifetime or a fixed number of years (up to 20). In some cases, it makes sense to delay distributions. You might want to create the trust now, claim a charitable deduction, and wait to start receiving income until a later date. This strategy may allow the assets in the trust to grow in value before payments begin.
Tax and Estate Planning Benefits
One of the main reasons to consider a CRT is the tax benefit it provides. When structured correctly, a CRT may help you:
- Avoid immediate capital gains taxes when appreciated assets are sold.
- Receive an income tax deduction based on the value of the future charitable gift.
- Reduce the size of your taxable estate.
- Benefit from reinvested assets that produce more income than the original asset.
It’s important to know that the IRS requires the trust to pay out at least 5% of the trust’s value each year and no more than 50%. We’ll walk you through these requirements and help you stay within the guidelines.
Choosing Between a CRAT and CRUT
Your choice of trust type depends on your income goals:
- CRAT: Offers fixed annual payments, ideal for those who prefer predictability. Best funded with cash or marketable assets.
- CRUT: Provides variable payments based on the trust’s value, which may increase with market growth. A good choice if you want income that keeps pace with inflation.
We’ll help you compare both options and decide which approach supports your needs and charitable goals.
How We Can Help
At Palmer & Slay, PLLC, we work closely with individuals and families across Mississippi to build estate plans that reflect their values and long-term goals. If you’re considering a Charitable Remainder Trust, we’ll help you evaluate whether it fits into your overall plan.
Our team can assist with:
- Reviewing your assets and intended beneficiaries
- Explaining the potential benefits and limitations of CRTs
- Preparing and finalizing the trust agreement
- Coordinating with your financial advisor or tax professional
- Ensuring the trust complies with all legal and tax requirements
We take the time to understand what matters most to you and offer clear guidance to help you move forward with confidence.
Contact Our Experienced Brandon & Rankin County Charitable Remainder Trust Attorneys
A Charitable Remainder Trust can be a thoughtful way to give back while protecting your future. With the right planning, it’s possible to generate income, reduce taxes, and support the organizations that matter most to you.
If you’re ready to explore your options, the attorneys at Palmer & Slay, PLLC, are here to help. Contact us today to schedule a consultation and take the next step toward a purposeful estate plan.