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Charitable Remainder Trust Explained
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Charitable Remainder Trust (CRT) – What You Should Know!

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What is a charitable remainder trust (CRT)?

 A charitable remainder trust (CRT) is an irrevocable trust, meaning it cannot be modified or terminated without the beneficiary’s permission.

 A CRT is a tax-exempt trust designed to assist you in reducing the taxable income of the individual. It is designed to disperse income to the beneficiaries for a specific amount of time (no more than 20 years) and then donating the remainder of the Trust to the designated charity (IRS-approved).

 This type of Trust is a “split-interest” giving vehicle. It allows the  trustor to make contributions while being eligible for a partial tax deduction and donate the remaining assets.  

 Now, the CRT can be considered to be the following: “charitable giving while generating income.” So you can effectively “secure a lifetime of income, save taxes, and benefit a charity.”

Why should I allow a trust to manage my assets an appreciated property?  

 Well, there are countless examples of how a CRT works effectively, especially from a tax perspective. We would say to NOT sell any highly appreciated assets before reviewing the power of a CRT!

Our probate attorneys are well versed to help mitigate loss, ensuring a cost effective and smooth process.

Call 949-706-7300

Serving State: California, Southern California

Serving Counties: Orange County, Los Angeles County, Riverside & San Bernardino County, San Diego County

Serving Cities: Newport Beach, Huntington Beach, Irvine, Costa Mesa, Laguna Beach, Newport Coast, Corona Del Mar, Santa Ana, Anaheim, San Juan Capistrano, San Clemente, Buena Park, Fullerton, Orange, Lake Forest, Laguna Hills, Garden Grove, Tustin, Yorba Linda, Fountain Valley, Westminster, Dana Point, Rancho Santa Margarita, North Tustin, Seal Beach, Los Alamitos, Villa Park, Ladera Ranch, Placentia, Laguna Woods, Aliso Viejo, Coto De Caza, State of California


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What types of charitable remainder trusts are available?

  1.  Charitable remainder unitrusts or CRUTs
  2. The CRATs distribute a fixed percentage based on the balance of the trust assets (revalued annually) and can contribute other additional assets.
  • Charitable remainder annuity Trusts or CRATs
  1. The CRATs distribute a fixed annuity amount per each year, and additional contributions are not allowed.

If you have questions, please fill any form on the site or call:

Call: 949-706-7300.

To discuss your situation, to meet with us or to get your questions answered, please call our office to schedule an appointment: 949-706-7300.

Concerning CRTs, what are the Pros and Cons?

Tax-exempt: You can reduce your taxes with a charitable income tax deduction. For example, consider the following:

  • Fund the CRT with cash: Donor can use a charitable deduction of up to 60% of the Adjusted Gross Income (AGI)
  • Appreciated real estate assets: Up to 30% of their AGI for the tax year
  • Can’t use the total deduction for the year? Can carry the deduction for up to 5 additional years.
  • Can convert appreciated assets into a lifetime or retirement income stream: The CRT can be structured to defer the payment stream and provide an income during retirement
  • Defer capital gains tax: Great for a highly appreciated property’s. You can defer the capital gains until the time it’s distributed out to the income beneficiary.
  • Schedule an appointment today. Our specialized team is ready to assist you.

    Call 949-706-7300.

    What assets can be donated to a CRT?

    • Public traded securities
    • Cash
    • Certain types of stock (CTSs cannot hold S-Corp stock)
    • Real estate
    • Other assets

    What mistakes to avoid in a CRT?

    When it comes to drafting a CRT, there are specific technical requirements that go into the Trust. So in essence, the CRT requires that the payment to the non-charity be stated as a fixed annual amount (CRAT) or a fixed percentage of the trust value as determined annually (a CRUT)


    Bottom line

    Before deciding on a CRT, you need to consider the impact it will have on your future as CRTs are irrevocable with many tax implications. 

     Hess-Verdon & Associates will work with you to create a financial plan to help you navigate the tax rules and implications.

    Contact us today at 949-706-7300.

    Call: 949-706-7300.

    To discuss your situation, to meet with us or to get your questions answered.

    We are proud to serve Clients throughout California.

    Where are we located?

    We are located in the Fashion Island in Newport Beach. 

    Our address is 620 Newport Center Drive, Suite 1400, Newport Beach, CA. 92660

    Call: 949-706-7300

    Hess-Verdon & Associates, PLC

    A Professional Law Corporation