A Charitable Remainder Trust (CRT) is a powerful planning tool that allows you to support the charities you care about, receive an income stream for life (or for a set number of years), and potentially benefit from income tax and estate tax benefits. For many Louisiana families, a charitable remainder trust is a way to turn appreciated assets—such as stock or real estate—into a steady income stream while ultimately benefiting a church, school, or other charitable organization.
If you are new to terms like grantor, income beneficiary, or remainder beneficiary, you can review our Louisiana Estate Planning Glossary for quick definitions.
What Is a Charitable Remainder Trust in Louisiana?
A charitable remainder trust in Louisiana is an irrevocable trust that:
- Pays you (and/or another non-charitable beneficiary) an income for life or for a term of years, and
- Leaves whatever remains (“the remainder”) to one or more qualified charities when the trust ends.
You transfer assets—often highly appreciated stock or real estate—into the CRT. The trust can then sell those assets without immediately triggering capital gains tax inside the trust. In return, you receive:
- A stream of income for life or for a chosen term
- An immediate charitable income tax deduction based on the value projected to go to charity
- Potential estate tax benefits for larger estates
Because the charitable remainder trust is irrevocable, it must be carefully designed to fit your goals, your income needs, and your charitable intentions.
How Does a Charitable Remainder Trust Work?
In a typical charitable remainder trust in Louisiana plan:
- You transfer appreciated assets (such as stock, a rental property, or other investments) into the CRT.
- The CRT may sell the assets and reinvest in a diversified portfolio without immediate capital gains taxation inside the trust.
- The CRT pays you, your spouse, or another beneficiary a fixed amount or a percentage of trust value each year.
- At the end of the trust term or at your death, the remaining trust assets pass to your chosen charity or charities.
There are two main types of CRTs:
- Charitable Remainder Annuity Trust (CRAT) – Pays you a fixed dollar amount each year.
- Charitable Remainder Unitrust (CRUT) – Pays you a fixed percentage of the trust value, recalculated annually.
Why Use a Charitable Remainder Trust in Louisiana?
A charitable remainder trust can make sense for Louisiana residents who:
- Own highly appreciated assets and want to reduce capital gains taxes
- Want to receive a reliable income stream in retirement
- Wish to make a significant charitable gift but still need income
- Want to reduce the size of their taxable estate for federal estate tax purposes
- Value charitable legacy and multigenerational planning
More information on charitable contribution deductions and qualified charities can be found on the IRS website:
IRS – Charitable Contributions.
Tax Benefits of a Charitable Remainder Trust
While you should always consult your tax professional, CRTs may offer several advantages under current federal law:
- Income tax deduction: You may receive a charitable income tax deduction in the year the CRT is funded, based on the calculated value of the remainder going to charity.
- Deferral of capital gains: Appreciated assets can be sold inside the CRT without immediate capital gains tax, allowing more of the sale proceeds to be reinvested.
- Potential estate tax reduction: Removing assets from your taxable estate and directing them to charity can help reduce estate tax exposure for larger estates.
Because the charitable remainder trust is irrevocable, it is essential to model your income needs and tax situation before funding the trust.
Real-Life Example: Turning Appreciated Stock Into Income
Imagine a couple in Metairie who bought stock years ago for $50,000 that is now worth $300,000. If they sell the stock outright, they may owe a large capital gains tax bill. Instead, they transfer the stock into a charitable remainder trust in Louisiana.
The CRT sells the stock, reinvests the full $300,000, and pays the couple an income each year for the rest of their lives. They receive:
- A charitable income tax deduction in the year of the transfer
- Steady income in retirement
- The satisfaction of knowing that at their deaths, the remaining funds will go directly to their church and a favorite local charity
How a Charitable Remainder Trust Fits Into Your Overall Plan
A charitable remainder trust is rarely a stand-alone strategy. It often works alongside:
- A Revocable Living Trust for general estate planning and probate avoidance
- A Last Will & Testament for backup and pour-over provisions
- Beneficiary designations on IRAs, 401(k)s, and life insurance
- Other charitable tools, such as donor-advised funds or outright bequests
At Morrison Law Group, we coordinate your legal documents with your financial and charitable goals so your plan works together as a whole.
Is a Charitable Remainder Trust Right for You?
A charitable remainder trust in Louisiana can be a powerful way to convert appreciated assets into income, reduce taxes, support worthy causes, and create a lasting legacy. But CRTs are complex and must be carefully designed to comply with IRS rules and align with your real-life needs.
We help clients analyze whether a CRT makes sense alongside their other estate and financial planning tools, and we work closely with their financial advisors and tax professionals to build a coordinated plan.
Serving Metairie, Covington, and families across South Louisiana.
Call us at (504) 831-2348 to schedule a consultation and explore whether a charitable remainder trust is a good fit for your Louisiana estate and charitable planning.
