What is the charitable remainder trust and how does it work?

A charitable trust is a form of an irrevocable trust that devises assets to a specified charity. You create the trust and then transfer the assets you intend on donating. The charity must be approved by the IRS, which usually means it has tax-exempt status under the Internal Revenue Code. The charity serves as trustee of the trust. During your lifetime, the charity manages and/or invests the trust assets and pays you (or another beneficiary) a portion of the income generated by the trust assets for a certain number of years, or for your whole life. At your death, or a period of time you specify, the remainder of the assets becomes the property of the charity.