Charitable Remainder Trusts

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If you own appreciated assets, run a business, or have built up wealth over a lifetime, you may be looking for a way to give back, reduce your tax burden, and still take care of your family. A Charitable Remainder Trust, or CRT, can do all three. At Slowik Estate Planning in Atlanta, Georgia, we help clients use these powerful tools to meet their financial and charitable goals. This page explains what CRTs are, how they work under federal and Georgia law, and why working with an estate planning attorney in Atlanta matters when setting one up.

Table of Contents

What Is a Charitable Remainder Trust?

A Charitable Remainder Trust is a type of irrevocable trust. You transfer assets into the trust, and the trust pays income to you or your chosen beneficiaries for a set period of time. When that period ends, whatever remains in the trust goes to one or more qualified charities. It is called a “remainder” trust because the charity receives what is left over after the income payments are made.

There are two basic types of qualified charitable remainder trusts: the annuity trust and the unitrust. The first type is the Charitable Remainder Annuity Trust, or CRAT. A charitable remainder annuity trust pays out each year a fixed dollar amount, at least 5% and not more than 50% of the initial fair market value of trust assets. The second type is the Charitable Remainder Unitrust, or CRUT. A charitable remainder unitrust pays a fixed percentage, which is not less than 5 percent nor more than 50 percent, of the net fair market value of its assets, valued annually, not less often than annually, to one or more persons for a term of years not in excess of 20 years, or for the life or lives of such individuals.

The key difference is simple. With a CRAT, your payments stay the same every year. With a CRUT, your payments change based on the trust’s value each year. If the trust grows, so do your payments. If it shrinks, your payments go down. Your choice between the two depends on your financial situation and goals.

An annuity trust or unitrust may also be set up for a specified number of years, not to exceed 20, under IRC Section 664(d). This gives you flexibility in planning how long income payments will last. Whether you want income for life or for a fixed term, a CRT can be structured to fit your needs.

Georgia law supports charitable trusts through the Revised Georgia Trust Code of 2010, found at O.C.G.A. Title 53, Chapter 12. Under Georgia law, a charitable trust is a trust in which the settlor provides that the trust property shall be used exclusively for charitable purposes. Article 9 of Chapter 12, covering O.C.G.A. §§ 53-12-170 through 53-12-175, governs charitable trusts in Georgia and works alongside federal rules under the Internal Revenue Code.

The Tax Benefits of a Charitable Remainder Trust

One of the biggest reasons people set up CRTs is the tax advantage. When you transfer appreciated property into a CRT, you can receive a partial charitable income tax deduction in the year you fund the trust. You do not pay capital gains tax when the trust sells the asset. The trust itself is generally tax-exempt, which means the full sale proceeds can be reinvested to generate income for you.

A charitable remainder annuity trust and a charitable remainder unitrust shall, for any taxable year, not be subject to any tax imposed by this subtitle. This is the core tax benefit. Because the trust does not pay income tax when it sells appreciated assets, more money stays in the trust to generate your income stream.

When a qualified charitable remainder trust is created, a current tax deduction is allowed for the value of the charitable remainder interest. The IRS calculates this deduction based on the present value of what the charity will eventually receive. The value of the remainder interest, determined under Section 7520, must be at least 10 percent of the initial net fair market value of all property placed in the trust. This 10% rule is a firm federal requirement. If the remainder interest does not meet this threshold, the trust will not qualify.

Here is a practical example to make this clear. Suppose you purchased stock years ago for $50,000, and it is now worth $500,000. If you sold it outright, you would owe capital gains tax on the $450,000 gain. If you transfer it to a CRT instead, the trust sells the stock tax-free, reinvests the full $500,000, and pays you income for life or for a set term. You also receive a charitable deduction in the year you fund the trust. This is a significant benefit for anyone holding appreciated assets.

The tax savings from a CRT can also reduce your overall estate. Because the assets transfer out of your taxable estate, they may lower your estate tax exposure. For Georgia residents with large estates, this is an important consideration. An Atlanta estate planning lawyer at Slowik Estate Planning can help you calculate the potential tax savings before you commit to a CRT structure.

How Georgia Law Governs Charitable Remainder Trusts

Georgia has a solid legal framework for charitable trusts. The Revised Georgia Trust Code of 2010, codified under O.C.G.A. Title 53, Chapter 12, provides the rules that govern how trusts are created, administered, and enforced in this state. Article 9 of that chapter, covering O.C.G.A. §§ 53-12-170 through 53-12-175, deals specifically with charitable trusts.

Under Georgia law, 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 the prevention of cruelty to animals, among others. This broad definition means your CRT can benefit a wide range of causes, from local Atlanta nonprofits to national organizations.

Georgia also has oversight mechanisms to protect charitable trust beneficiaries. 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 in all legal matters pertaining to the administration and disposition of such trust. This means the state has a role in making sure your charitable intentions are carried out properly.

Georgia trust law also addresses how trustees must manage trust assets. Article 16 of the Revised Georgia Trust Code covers trust investments under O.C.G.A. §§ 53-12-340 through 53-12-364. Trustees must follow the prudent investor standard, which means they must manage trust assets carefully and in the best interests of both the income beneficiaries and the charitable remainder beneficiaries. This matters because the trustee’s investment decisions directly affect how much income you receive and how much the charity ultimately gets.

Federal law under IRC Section 664 also applies to every CRT, regardless of which state you live in. Georgia law works alongside these federal rules. When you work with Slowik Estate Planning, we make sure your trust document meets both Georgia state requirements and IRS qualification rules. Getting both right from the start avoids costly problems later. We also help with related planning tools, including asset protection strategies that can complement your CRT.

Who Should Consider a Charitable Remainder Trust in Atlanta?

A CRT is not the right tool for everyone. But for the right person, it can be a powerful part of an estate plan. So who is a good candidate? Generally, CRTs work best for people who have highly appreciated assets, want a stream of income, care about supporting a charitable cause, and want to reduce their tax burden at the same time.

Consider someone who has owned a piece of Atlanta real estate for 30 years. The property has gone up significantly in value. Selling it outright would trigger a large capital gains tax. Transferring it to a CRUT instead allows the trust to sell it tax-free, reinvest the proceeds, and pay the owner income for life. The owner also gets a charitable deduction in the year of the transfer. The charity receives whatever is left when the income period ends.

Business owners who are selling their companies are another group that often benefits from CRTs. If you are about to receive a large lump sum from a business sale, contributing some of that value to a CRT before the sale closes can reduce your taxable income and provide a steady income stream during retirement.

Retirees who want to support a cause they care about, while still generating income, are also strong candidates. A CRT lets you make a meaningful gift to a charity, such as a local Atlanta hospital, a university, or a faith organization, without giving up your income today. You get the satisfaction of giving and the financial benefit of a tax deduction and ongoing income.

Families with complex estate plans may also use CRTs alongside other tools. For example, some clients combine a CRT with a life insurance trust to replace the value passing to charity, so heirs are not left with less. If your plan includes trust beneficiaries who rely on inherited assets, this combination strategy may be worth exploring. Slowik Estate Planning can walk you through the options.

Important Tax Considerations and the Step-Up in Basis Rule

When planning with a CRT, it is important to understand how the step-up in basis rule under IRC Section 1014 applies, and where it does not. This rule normally allows heirs to inherit appreciated assets at their current fair market value, wiping out the built-in capital gain. But this rule does not apply in all trust situations, and that distinction matters when choosing between a CRT and other estate planning tools.

Under Rev. Rul. 2023-2, the IRS clarified an important point about irrevocable trusts and the step-up in basis. If an individual transfers assets to an irrevocable trust as a completed gift for gift tax purposes, and those assets are not included in the person’s gross estate at death, the assets do not receive a stepped-up basis at death. This is because, under IRC Section 1014(b), a basis adjustment only applies to property that is acquired by bequest, devise, or inheritance, or that falls within one of the other specific categories listed in that section. Assets held in a properly structured CRT, which are not part of the donor’s taxable estate, generally will not receive this step-up.

Why does this matter for CRT planning? Because the assets you put into a CRT will eventually pass to charity, not to your heirs. Since charities do not pay income tax, the lack of a step-up in basis does not hurt them. The bigger picture is that a CRT is designed to benefit you through income and a tax deduction now, and to benefit your chosen charity later. Your heirs receive their inheritance through other parts of your estate plan, not through the CRT itself.

This is why a complete estate plan matters. A CRT is one piece of a larger picture. At Slowik Estate Planning, we look at your full financial and family situation before recommending any particular tool. We also make sure your plan addresses all your loved ones, including provisions for pet guardianships and other personal priorities that are often overlooked. Every detail matters when your legacy is on the line.

How Slowik Estate Planning Can Help You Set Up a CRT in Atlanta

Setting up a Charitable Remainder Trust requires careful drafting, tax planning, and a clear understanding of both federal and Georgia law. The trust document must meet IRS requirements under IRC Section 664 to qualify for the tax benefits. It must also comply with Georgia’s Revised Trust Code. One mistake in the drafting can disqualify the trust or reduce its benefits significantly.

At Slowik Estate Planning, located in Atlanta, Georgia, we work with clients throughout the metro area to create estate plans that are built around their goals. Our firm takes the time to understand your assets, your family, your charitable interests, and your tax situation before recommending a CRT or any other planning tool. We do not take a one-size-fits-all approach.

The process starts with a conversation. You tell us what you own, what you want to accomplish, and who you want to benefit. We then explain your options in plain language, without confusing legal jargon. If a CRT makes sense for you, we draft the trust document, help you select a trustee, and coordinate with your financial advisor and tax professional to make sure everything works together.

We also make sure your broader estate plan is in order. A CRT works best when it is part of a complete plan that includes a will, powers of attorney, healthcare directives, and other trust arrangements as needed. If you have not yet worked with an estate planning attorney, or if your current plan is outdated, now is a good time to review it. Contact Slowik Estate Planning today to schedule a consultation. We are here to help you protect your assets, support the causes you care about, and take care of the people you love.

FAQs About Charitable Remainder Trusts in Atlanta, Georgia

What assets can I put into a Charitable Remainder Trust?

You can fund a CRT with a wide range of assets, including stocks, bonds, real estate, and business interests. Highly appreciated assets are often the best candidates because the trust can sell them without triggering capital gains tax, allowing the full value to be reinvested and used to generate income for you. Cash contributions are also allowed. However, certain assets, such as debt-encumbered property, can create complications. Slowik Estate Planning reviews your specific assets before recommending a CRT structure to make sure it is the right fit.

Can I be the trustee of my own Charitable Remainder Trust?

Yes, in many cases the donor can serve as the trustee of their own CRT. However, there are important rules to follow. As trustee, you must manage the trust assets prudently and in a way that serves both the income beneficiaries and the charitable remainder beneficiaries. You cannot engage in self-dealing transactions. Some donors prefer to appoint an independent trustee, such as a bank or trust company, to handle the administrative responsibilities. An estate planning attorney can help you weigh the pros and cons of each option based on your situation.

How is the charitable deduction calculated for a CRT?

The IRS calculates your charitable deduction based on the present value of the remainder interest that the charity will receive at the end of the trust term. This calculation uses the IRS Section 7520 interest rate, the payout rate, the length of the trust term, and the ages of the income beneficiaries. Federal law requires that the present value of the charitable remainder interest be at least 10 percent of the initial fair market value of all property placed in the trust. A tax professional or estate planning attorney can run this calculation before you fund the trust so you know what to expect.

What happens if the charity I named no longer exists when the trust ends?

This is a common concern, and it is one reason why careful drafting matters. A well-drafted CRT should name a primary charitable beneficiary and one or more backup charities. It can also give the trustee the authority to select a substitute charity if the named organization no longer qualifies under IRS rules. Under Georgia law, the Attorney General has oversight responsibility for charitable trusts, which provides an additional layer of protection. Slowik Estate Planning drafts CRT documents with these contingencies in mind so your charitable intent is carried out no matter what.

Does a Charitable Remainder Trust protect my assets from creditors?

A CRT is an irrevocable trust, which means you give up ownership and control of the assets you transfer into it. Because you no longer own those assets, they are generally not available to your personal creditors. However, your right to receive the income stream from the trust may still be reachable by creditors in some circumstances. A CRT is primarily a charitable and tax planning tool, not a creditor protection vehicle. If asset protection is a key goal, Slowik Estate Planning can discuss additional strategies alongside your CRT as part of a broader estate plan.

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