With the uncertainty of future estate tax laws, you may be understandably reluctant to lock yourself into long-term wealth transfer strategies. But some estate planning moves do more than slice your tax bill. With a charitable remainder trust (CRT), for example, you get the satisfaction of supporting a favorite philanthropy. You also stand to save a lot on income taxes. And you can make sure your heirs won’t lose out, either.

A CRT is relatively simple. You start with an irrevocable transfer of assets into the trust. Ideally, you should contribute an appreciated asset—stock or real estate, for example, that would generate a taxable capital gain if it were sold outside the CRT. With a CRT, you don’t have to pay for those gains. Just keep in mind that irrevocable means just that. These assets aren’t coming back.

A trustee you appoint—an institution or an individual—controls the assets, and under the terms of the trust, you or other beneficiaries receive regular income. After 20 years, the maximum term allowed by the IRS, or upon the death of the last remaining beneficiary—whichever comes first—the trust assets go to the charity you selected. During your lifetime, you can change the designated charity. You can also specify how it is to use the donation.

Suppose you and your spouse own real estate purchased two decades ago for $200,000. You transfer the property, now worth $1 million, into a CRT. The trust sells the property, invests the proceeds, and pays you and your spouse 8% ($80,000) in annual income.

Your tax benefits include:

• Eliminated capital gains tax. As long as the appreciated assets are transferred to the CRT, a tax-exempt entity, before being sold, you don’t have to pay taxes on capital gains.
• An income tax deduction for making a charitable donation. The amount of the deduction depends on the present value of the future gift, the ages of you and your spouse, prevailing interest rates, the type of charity, the amount of income you receive, the kind of gift, and the trust’s terms.
• No estate tax. If you’d left your children the property instead, they might owe up to 45% of its value (based on the estate tax law for decedents dying in 2009).

Of course, even a bequest reduced by taxes would be more than your kids get from the CRT. To remedy that, use part of your current tax savings to purchase a $1 million “second-to-die” life insurance policy with an irrevocable life insurance trust naming your children as beneficiaries. The cost depends on the ages of you and your spouse and other factors. Then, when you and your spouse are both gone, the kids receive $1 million in tax-free proceeds and the charity receives the trust assets. And, chances are, you’ll be fondly remembered.