Charitable Remainder Trust Deep Dive

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If you want to give generously, earn income, and reduce your tax burden all at the same time, a Charitable Remainder Trust (CRT) might be one of the smartest tools in your estate plan. At Slowik Estate Planning in Atlanta, Georgia, we help clients understand how these trusts work and whether they are the right fit. A CRT lets you transfer assets to a trust, receive income payments for a set period, and leave the remaining assets to a charity you care about. It sounds simple, but the details matter a great deal. The right structure can make a real difference in how much you keep, how much you give, and how your estate is handled after you are gone.

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What Is a Charitable Remainder Trust?

Charitable remainder trusts are irrevocable trusts that let you donate assets to charity and draw annual income for life or for a specific time period. That word “irrevocable” is important. Charitable remainder trusts are irrevocable, meaning assets that go in cannot be taken back. So before you set one up, you need to be certain about your decision.

Here is how the basic structure works. You transfer property into the trust. The trust pays income to you, or to another named beneficiary, for a set term. The payments continue for a specific term of up to 20 years or the life of one or more beneficiaries. At the end of the payment term, the remainder of the trust passes to one or more qualified U.S. charitable organizations. One key federal rule: the remainder donated to charity must be at least 10% of the initial net fair market value of all property placed in the trust.

Georgia law also has something to say about charitable trusts. Under O.C.G.A. § 53-12-170, which is part of the Revised Georgia Trust Code of 2010, a charitable trust is a trust in which the settlor provides that the trust property shall be used exclusively for charitable purposes. Georgia defines “charitable purposes” broadly. Charitable purposes include the relief of poverty, the advancement of education, the advancement of ethics and religion, the advancement of health, the advancement of science and the arts and humanities, the protection and preservation of the environment, and other similar subjects having for their object the relief of human suffering or the promotion of human civilization.

One more Georgia-specific point worth knowing: under O.C.G.A. § 53-12-173, a charitable trust shall be valid even though under the trust provisions it is to continue for an indefinite or unlimited period. That gives Georgia donors real flexibility when planning long-term charitable giving. If you want to know whether a CRT fits your goals, contact Slowik Estate Planning for a consultation.

The Two Main Types of Charitable Remainder Trusts

Not all CRTs are built the same. There are two primary types, and the one you choose will affect how your income payments work. Choosing the wrong type can cost you money or leave you with less flexibility than you need. Understanding the difference is step one.

The first type is a Charitable Remainder Annuity Trust, or CRAT. A CRAT pays a specific dollar amount each year. The amount is at least 5% and no more than 50% of the value of the corpus when the trust is established. That amount stays fixed. It does not change based on how the trust performs. The payout does not vary, and it does not matter how much income the trust earns during the year. That predictability can be great for budgeting, but it comes with a trade-off. Once you fund a CRAT, you cannot add more assets to it.

The second type is a Charitable Remainder Unitrust, or CRUT. A CRUT pays a percentage of the value of the trust each year to noncharitable beneficiaries. The payments generally must equal at least 5% and no more than 50% of the fair market value of the assets, valued annually. Because the trust is revalued each year, your income payments can go up or down with the market. With a fixed percentage being distributed, there is always some percentage remaining in the CRUT, eliminating the risk of early exhaustion that the CRAT contends with. Also, CRUTs permit additional contributions to the trust, whereas a CRAT cannot make additions.

Both types can be created during your lifetime or through your wills. Both types of trusts can be made while the donor is alive (inter vivos) or upon death (testamentary). The right choice depends on your income needs, your asset types, and your overall estate plan. An Atlanta estate planning lawyer at Slowik Estate Planning can walk you through both options in plain language so you can make a confident decision.

The Tax Benefits of a Charitable Remainder Trust

One of the biggest reasons people set up a CRT is the tax benefit. There are several, and they work together in a way that can be very powerful, especially if you are holding low-basis appreciated assets like stock or real estate.

First, there is an income tax deduction. A charitable remainder trust is a “split interest” giving vehicle that allows you to make contributions to the trust and be eligible for a partial tax deduction, based on the CRT’s assets that will pass to charitable beneficiaries. The size of that deduction depends on several factors. The partial income tax deduction is based on the type of trust, the term of the trust, the projected income payments, and IRS interest rates that assume a certain rate of growth of trust assets.

Second, the trust itself is generally tax-exempt on its investment income. The CRT’s investment income is exempt from tax, making the CRT a good option for asset diversification. You may consider donating low-basis assets to the trust so that when sold, no income tax is generated to you and you eliminate the capital gains tax on the sale of the asset. However, keep in mind that the named income beneficiary will pay income tax on the income stream received.

There is also a newer planning option tied to IRAs. You can elect to make a one-time distribution up to $54,000 from an individual retirement arrangement to charities through a charitable remainder annuity trust, a charitable remainder unitrust, or a charitable gift annuity if it is funded only by qualified charitable distributions. Looking ahead to 2026, up to $55,000 of a qualified charitable distribution can be contributed to a charitable remainder trust in 2026.

CRTs can work best for those with low-basis assets who need an income stream from that asset and have a desire to donate what is left over to charity. While an IRA could accomplish a similar gift with a charity listed as the designated beneficiary, the CRT provides an income tax deduction to the donor in the year created for the present value expected to pass to charity. Tax law changes in 2026 under the One Big Beautiful Bill Act also affect how charitable deductions work for itemizers, making CRTs an even more attractive planning tool for many Atlanta families. Reach out to Slowik Estate Planning to see how these rules apply to your specific situation.

How Georgia Law Governs CRT Administration and Oversight

Setting up a CRT is one thing. Making sure it is properly administered is another. Georgia has specific rules about how charitable trusts are overseen, and those rules protect both you and the charity you intend to benefit.

Under O.C.G.A. § 53-12-174, in all cases in which the rights of beneficiaries under a charitable trust are involved, the Attorney General or the district attorney of the circuit in which the major portion of trust property lies shall represent the interests of the beneficiaries and the interests of this state as parens patriae in all legal matters pertaining to the administration and disposition of such trust. In plain terms, the state of Georgia takes an active role in protecting charitable trust beneficiaries. This is not just a formality. Any judgment determining rights under any charitable trusts shall be binding on the beneficiaries if the Attorney General or the district attorney of the circuit in which the major portion of the trust property lies is a party and is served as provided in this Code section.

The Revised Georgia Trust Code of 2010, found under O.C.G.A. Title 53, Chapter 12, also governs trustee duties, accounting requirements, and trust investments. Article 11 addresses trustee responsibilities, while Article 12 covers accounting. Article 16 deals with trust investments, and Article 13 governs general trust administration. Proper trust administration is not optional. A trustee who mismanages a CRT can face serious legal consequences under Article 14 of the Georgia Trust Code, which addresses breach of trust.

The IRS also monitors CRTs closely. The IRS closely examines charitable remainder trusts to ensure they correctly report trust income and distributions to beneficiaries. Annual reporting on Form 5227 is required. For calendar year 2025, Form 5227 is due by April 15, 2026. Failure to comply can jeopardize the trust’s tax-exempt status and create penalties. Proper drafting and ongoing administration are critical. Slowik Estate Planning works with clients in Atlanta, Georgia to make sure their CRTs are set up correctly and stay compliant over time. Understanding how trust beneficiaries are treated under both Georgia and federal law is a key part of that process.

Who Should Consider a Charitable Remainder Trust in Atlanta?

A CRT is not for everyone. But for the right person, it can be a very effective planning tool. So who is the right person? Think about your own situation as you read through these common profiles.

You may be a good candidate if you own appreciated assets, like real estate or stock, that you want to sell without triggering a large capital gains tax bill. The CRT lets the trust sell the asset, reinvest the proceeds, and pay you income over time. You get diversification without a massive immediate tax hit. CRTs can work best for those with low-basis assets who need an income stream from that asset and have a desire to donate what is left over to charity.

You might also consider a CRT if you are approaching retirement and want a reliable income stream alongside a meaningful charitable gift. Charitable trusts can offer flexibility and some control over your intended charitable beneficiaries as well as lifetime income, thereby helping with retirement, estate planning and tax management. Retirees who want to reduce required minimum distributions from their IRAs while supporting a cause they believe in are also strong candidates for the IRA-to-CRT one-time election discussed earlier.

Business owners selling a company, landowners with appreciated property, and professionals with concentrated stock positions are all people who commonly benefit from this strategy. Even families with international assets may find CRTs useful as part of a broader plan. If you have cross-border estate planning concerns, Slowik Estate Planning also handles International Estate Planning matters. And if your estate plan includes animals, you might be surprised to learn that Georgia law even allows for pet guardianships and trusts, which can be coordinated alongside a CRT.

One important note: every person’s tax situation is different. A CRT that works well for one client may not be the right fit for another. Slowik Estate Planning, located in Atlanta, Georgia, provides personalized guidance to help you decide whether a CRT makes sense for your goals. No two estate plans are identical, and results will vary based on your individual circumstances. Prior results in estate planning do not guarantee similar outcomes for other clients.

FAQs About Charitable Remainder Trusts in Atlanta, Georgia

Can I change the charity named in my Charitable Remainder Trust after it is created?

It depends on how the trust is drafted. Depending on how the CRT is established, the trustee may have the power to change the CRT’s charitable beneficiary during the lifetime of the trust. However, because a CRT is irrevocable, you cannot simply revoke or rewrite it. The trust document must specifically allow for a change of charitable beneficiary. This is one reason why careful drafting from the start matters so much. Slowik Estate Planning helps clients in Atlanta build flexibility into their trusts wherever the law allows.

What happens to the income payments if the trust assets lose value?

The answer depends on which type of CRT you have. With a CRAT, your payment stays the same regardless of how the trust performs, because it is a fixed dollar amount set when the trust was created. With a CRUT, your payments fluctuate because they are based on a percentage of the trust’s value as revalued each year. The unitrust amount is a fixed percentage of the net fair market value of the trust’s assets, and because the unitrust amount is calculated annually based upon the fair market value of trust corpus, it is not a fixed amount. So if the trust grows, you get more. If it shrinks, you get less. Understanding this trade-off is essential before you choose a structure.

Does a Charitable Remainder Trust avoid estate taxes in Georgia?

Assets transferred to a properly structured CRT are generally removed from your taxable estate because the trust is irrevocable and the assets are no longer yours. However, the tax treatment depends on how the trust is drafted and funded. Under IRS Rev. Rul. 2023-2, assets transferred to an irrevocable trust as a completed gift generally do not receive a stepped-up basis at the grantor’s death if those assets are not included in the grantor’s gross estate under Chapter 11 of the Internal Revenue Code. This means that while estate tax exposure may be reduced, the trust’s carryover basis in the transferred assets remains unchanged. Proper planning with Slowik Estate Planning ensures you understand both the estate tax and income tax implications before you fund a CRT.

Is a Charitable Remainder Trust the same as a charitable lead trust?

No, they work in opposite ways. With a CRT, you or your named beneficiary receive income first, and the charity gets what is left at the end. With a charitable lead trust, the charity receives income payments first, and your heirs receive the remainder after the trust term ends. Both are legitimate estate planning tools, but they serve different goals. A CRT is generally better for donors who need income during their lifetime. A charitable lead trust is often used to transfer wealth to the next generation with reduced gift or estate tax. Slowik Estate Planning can help you compare both options based on your family’s priorities.

How does Georgia’s Attorney General play a role in my Charitable Remainder Trust?

Under O.C.G.A. § 53-12-174, in all cases in which the rights of beneficiaries under a charitable trust are involved, the Attorney General or the district attorney of the circuit in which the major portion of trust property lies shall represent the interests of the beneficiaries and the interests of this state as parens patriae in all legal matters pertaining to the administration and disposition of such trust. This means the state has a built-in watchdog role for charitable trusts. If a trustee mismanages the trust or fails to distribute assets to the charity as required, the Attorney General has authority to step in. This is a protection for the charitable mission of your trust, not a burden on you as the donor. Proper drafting and administration keep the trust running smoothly and in compliance with Georgia law.

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