Charitable Remainder Trusts: Extending IRA Benefits Beyond 10 Years 

Most people imagine an inherited IRA as a lasting gift that supports the next generation for years. That changed with the SECURE Act and the SECURE Act 10 year rule, which requires most non-spouse beneficiaries to withdraw the entire IRA within ten years. On paper, the rule sounds straightforward. In practice, it often creates a tax issue that families may not anticipate. 

Heirs who are in their peak earning years may find that these required withdrawals stack on top of salary, bonuses, stock compensation, and other income. What was intended as a thoughtful legacy can become a source of additional tax exposure. Instead of receiving measured support over time, beneficiaries may be pushed into higher brackets, lose more of the inheritance to taxes, and feel pressure to make quicker financial decisions. 

This is where planning can shape outcomes. A growing number of families are exploring ways to stretch the impact of inherited IRA income beyond the ten-year window, especially when long term support for children or grandchildren is a priority. One approach involves using a charitable remainder trust. A charitable remainder trust IRA strategy can distribute income over a longer period while supporting philanthropic goals, offering heirs a more gradual flow of payments rather than a decade long countdown. 

For individuals who want their savings to provide steadier support rather than a compressed tax event, understanding this approach can offer a foundation for a more intentional legacy plan.

What Is a Charitable Remainder Trust (CRUT)? 

A charitable remainder trust can sound intimidating at first glance, but at its core, it is a simple concept. Think of it as a way to take one asset, often a traditional IRA, and divide its benefits between the people you care about and the causes you value. Understanding how traditional and Roth IRAs differ can also provide useful context as you consider how these assets flow into a long-term plan. 

A CRUT is what is known as a split interest trust. Part of the value supports your chosen charity in the future, and part provides income to your heirs for a set period of time or for life. This structure allows your IRA to continue growing inside the trust on a tax deferred basis after you are gone, which can create a smoother, more predictable income stream compared to the ten-year payout rule. 

Here is how it works in practice: 

• Your IRA transfers into the CRUT at your passing 
• The trust invests those assets, allowing continued tax deferred growth 
• Your beneficiaries receive payouts each year based on a fixed percentage of the trust value 
• When the trust ends, either after the chosen term or after your heir’s lifetime, the remaining balance goes to the charity you have selected 

The IRS requires that the charity ultimately receive at least ten percent of the trust’s projected value. This threshold is what keeps the structure compliant and is also what makes a CRUT appealing for families who want meaningful giving and long-term planning woven together. 

For many individuals, especially those with large pretax accounts, a CRUT becomes a way to turn an unavoidable tax rule into a strategy that supports both family and purpose. It shifts the conversation from “How do we avoid the ten-year squeeze?” to “How do we create impact that lasts?” 

How a CRUT Can Extend IRA Benefits Beyond 10 Years 

For many families, the challenge created by the SECURE Act is straightforward. Heirs are now required to empty most inherited IRAs within ten years, whether they need the income or not. This compressed timeline often triggers higher taxes, pushes beneficiaries into steeper brackets, and shortens the life of the wealth you worked years to build. 

A charitable remainder trust creates a different path. 

Instead of leaving your IRA directly to your children or grandchildren, the IRA passes to the CRUT at your death. The trust receives the full balance in one lump sum, continues growing it tax deferred, and then pays your beneficiaries an annual income stream based on a fixed percentage. Your heirs are no longer tied to the ten-year clock because the CRUT becomes the recipient, not them personally. 

This shift can influence how long your IRA supports the people you care about and how your charitable intentions fit into the overall plan, especially for those who already think about charitable giving as part of their legacy. 

CRUTs offer several payout structures depending on your goals: 

• A fixed twenty-year term, allowing the IRA to stretch well beyond the SECURE Act timeline 
• Income for the lifetime of your heirs, which can support adult children during their peak earning years 
• Lifetime plus twenty years, creating even longer support for a younger generation 

Consider this simplified example. 

Imagine you intend to leave a one-million-dollar IRA to your daughter. Under the current ten-year rule, she might be required to take large withdrawals each year, possibly during her highest earning years. Instead, by leaving the IRA to a CRUT, she could receive a steady annual income for twenty years or even for life. The IRA continues working for her rather than being drained under a tight deadline. 

This approach does not remove the SECURE Act requirement, but it reframes the challenge. Your IRA becomes a long term, tax-aware income source for your family while still supporting a charitable cause you care about. 

Tax Advantages of Using a CRUT for IRA Assets 

One of the reasons families explore a charitable remainder trust IRA strategy is the way it reshapes how taxes are experienced over time. The goal is not to avoid taxes, but to create a distribution pattern that feels more manageable and more aligned with what you want your legacy to accomplish. 

When an IRA passes to a CRUT, the trust can sell the assets inside the IRA without triggering immediate capital gains tax. Understanding how capital gains work can help clarify why this added flexibility may matter for long-term planning. This structure gives the trust more freedom to reinvest in a way that supports long term growth. Instead of children or other beneficiaries being required to take large taxable withdrawals within a ten-year window, the CRUT distributes income gradually, often over twenty years or even for life. 

For many families, this slower payout schedule can make a meaningful difference. Imagine an adult child in their forties or fifties, already in their highest earning years. A ten-year inherited IRA distribution on top of salary and bonuses could move them into a significantly higher tax bracket. A CRUT provides an alternative by creating income that arrives steadily, at a pace that may help reduce the tax pressure created by compressed withdrawals. 

There can also be a charitable deduction at the time the trust is created, depending on how the structure is designed and how the remainder interest is valued. For families who already give to charity, this can support existing values while still prioritizing income for heirs. 

A CRUT is not the right fit for everyone, but for certain IRA owners, it offers a balance between supporting loved ones and giving to causes that matter while distributing taxes in a way that may feel more predictable over time. 

When a CRUT May Be the Right Fit 

A charitable remainder trust is not a one size fits all solution. It is a planning tool that tends to work best when it matches both the financial realities and the personal values of the family involved. The goal is to understand whether this approach aligns with what you want your wealth to accomplish. 

A CRUT may be worth exploring if: 

• You have a large traditional IRA 
This strategy is often most effective for IRA owners with substantial balances, where a compressed ten-year payout may create meaningful tax pressure for beneficiaries and accelerate the depletion of the account. 

• You want to provide income to children or grandchildren over many years 
Some families worry that a large inherited IRA withdrawn over ten years feels more like a windfall than a legacy. A CRUT creates consistency by turning that balance into a long-term income stream. 

• You are concerned about how heirs may handle a lump sum 
Whether it is financial maturity, spending habits, or family dynamics, some parents prefer a structure that provides guidance rather than an unrestricted inheritance. A CRUT offers a built-in system for pacing distributions. 

• You value charitable giving as part of your legacy 
A CRUT blends personal and philanthropic goals. Your chosen charity receives the remainder at the end of the trust, allowing you to support causes you care about while still prioritizing income for your heirs. 

• You are looking for ways to manage potential estate tax exposure 
For families with large estates, shifting assets into a CRUT can reduce the taxable value of the estate while redirecting dollars toward long term planning and purpose. 

Key Considerations and Potential Drawbacks 

A charitable remainder trust can be a meaningful planning tool, but like any advanced strategy, it comes with tradeoffs. Understanding the nuances helps families approach the decision with clarity rather than pressure. 

• Your heirs will not receive the full IRA balance 
Because a portion of the trust must ultimately go to charity, heirs receive income over time instead of inheriting the entire value outright. Some may appreciate this balance between legacy and impact, while others may find it limiting. 

• There are costs and responsibilities tied to the trust 
CRUTs require proper drafting, ongoing administration, and annual filings. They work best for families who are comfortable with more structured planning and long-term oversight. 

• Coordination is essential 
Because a CRUT touches areas such as tax planning, estate planning, and charitable giving, every component must work together. Beneficiary designations, trust terms, payout percentages, and charitable choices all need alignment to support your broader goals. 

• Not the best fit for smaller IRAs or heirs who need upfront funds 
If beneficiaries rely on an immediate lump sum or the IRA balance is modest, a CRUT may not offer enough value to justify the complexity. In those cases, simpler approaches may be more appropriate. 

A well designed CRUT can extend the life of an IRA and support long term legacy goals, but it should be evaluated thoughtfully and with a clear understanding of the tradeoffs. For many families, this balance is what makes the strategy appealing. 

How to Integrate a CRUT Into a Broader Legacy Plan 

A charitable remainder trust is most powerful when it is part of a broader plan rather than a standalone idea. For many families, a CRUT becomes one piece of a layered legacy approach that connects retirement income, charitable impact, and multigenerational wealth in a thoughtful way. 

A strong legacy plan starts with the basics: updated wills, a well-structured revocable living trust, and clear beneficiary designations. When a CRUT is added to that foundation, it can help shape how your IRA passes to the next generation and how charitable giving fits into your long-term intentions. 

Many clients pair a CRUT with other planning tools to create balance: 

• Partial Roth conversions to shift some IRA dollars into tax free accounts during lower income years 

• Qualified charitable distributions to reduce future RMD pressure while supporting meaningful causes 

• Donor advised funds to maintain flexibility around charitable timing and family involvement 

Together, these strategies help you decide which dollars to use now, which ones to preserve for heirs, and which ones to direct toward charitable impact. 

Because CRUTs distribute income over long periods, their effectiveness relies on a multiyear tax plan. Understanding how the trust’s payouts interact with your beneficiaries’ earnings, tax brackets, and other assets may help prevent surprises later. 

When woven into a larger estate, tax, and charitable plan, a CRUT can help shift a large IRA from a potential tax burden into a structured, purpose driven legacy that reflects your values. 

Next Steps: How to Explore Whether a CRUT Is Right for You 

Deciding whether to use a charitable remainder trust is less about the trust itself and more about what you want your wealth to accomplish. A helpful first step is to look at the full picture: the size of your IRA, the needs of your family, and any charitable values you want reflected in your legacy. Many people find that once they define these priorities, the right strategy becomes much easier to see. 

It can also be valuable to review your beneficiary designations and estate documents before year-end. Small details like where an IRA flows, who receives income, and how a trust is structured often determine whether your plan works the way you hope. 

If you’re curious about how a CRUT might fit into your financial, tax, or estate plan, our team can help you explore your options and run the scenarios that matter. The goal is clarity, so you understand how each choice affects your family and your long-term intentions. 

For a deeper dive into strategies designed for large IRA owners, download our free guide, 3 Key Planning Opportunities for Large IRAs. 

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