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Many of us wish we could give more support to our preferred charities. Most times, we are unable to do so because of financial pressures, we have our own retirement income and our heirs' well-being to consider, as well. However, there may be a way to address all three needs simultaneously.

The insurance industry offers what is known as a Charitable Remainder Trust (CRT) plan. The idea behind the CRT is simple: You can transfer your assets into an irrevocable trust, and guarantee a steady income stream for the rest of your life. The assets then become the property of the charity.

By the time you are ready to retire, your assets will likely have appreciated to a significant degree.

Should you pass these assets to your heirs, they will be forced to pay estate taxes at the assets' current value, frequently a very large sum. Transferring the assets into a CRT is a tax-free transaction, and the charity frequently enjoys a tax-exempt status, making this contribution highly attractive to it.

In return for your donation, the charity agrees to pay you a certain amount for the rest of your life. The two types of these agreements are known as the Charitable Remainder Annuity Trust (CRAT) and the Charitable Remainder Unitrust (CRUT). The CRAT pays out a fixed amount, which offers stability, but little protection from inflation. The CRUT, on the other hand, pays out a fixed percentage of the trust's value, which provides inflation protection, but may actually result in the amount decreasing, if the investment performs poorly.

Whether by means of a CRAT or a CRUT, you and the charity are provided for, but what about the heirs? The solution is simple: Your annuity income should be more than sufficient to purchase a life insurance policy. With your heirs named as beneficiaries. If the charity has received only a part of your assets, your heirs will still need to pay the estate taxes after your death. This frequently requires some part of the estate to be sold to come up with the funds. Instead, the death benefits of your insurance policy (which are tax-exempt) can be used to pay off the estate tax, and leave your heirs with the estate intact.

The specifics of your financial situation cannot be adequately addressed in this article. We recommend that you consult with an insurance professional, who can advise you on the best method to achieve your charitable giving goals.

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