The government giveth, and the government taketh away. And so it is with the Stretch IRA. For years, the stretch IRA has been a financial planning strategy used to extend the tax-deferred status of an IRA by passing it on to a non-spouse beneficiary, such as children or grandchildren, who then enjoyed the tax benefits “stretched” over their lifetimes.

With the enactment of the SECURE Act, the stretch IRA, if not dead, is severely wounded. There are no more lifetime stretches. The new law requires inherited IRAs to be fully distributed in 10 years or less. By eliminating the ability to take distributions over one’s lifetime, beneficiaries will now have to pay substantial income taxes on inherited IRAs. The only exceptions to the 10-year rule are “eligible beneficiaries”—defined as a surviving spouse, a disabled or chronically ill beneficiary, an individual who is not more than 10 years younger than the IRA owner, or a minor child.

But all is not lost. You can use a tax-exempt Charitable Remainder Trust (CRT) in place of a stretch IRA and accomplish much the same outcome. You create an unfunded or minimally funded trust during your lifetime.  The trust identifies the trust beneficiaries and the payout terms. The newly established trust becomes the beneficiary of your IRA. Then, when you die, the trust receives the IRA distribution and begins payments to your heirs for their lifetimes or a maximum of 20 years. By law, CRT payouts must be at least 5% but can go as high as 8%. At the end of the trust period, the remaining principal is distributed to a charity.

Besides IRAs, a CRT can also receive irrevocable gifts of cash, stock, bonds, certificates of deposit, real or personal property and insurance policies. And because you are making an irrevocable charitable gift, a Charitable Remainder Trust provides an upfront income tax deduction, which can be claimed immediately to the extent allowed by law.

Also, for gifts of appreciated assets, you bypass all upfront capital gains taxes when the assets are transferred to the trust prior to the outright sale, not to mention the 3.8% Obamacare surtax. Combined it means you avoid a potential tax bill of 23.8%. But wait! There’s more. Any assets contributed to a CRT are removed from your taxable estate and are not subject to estate taxes when you die.

Every charitable remainder trust must have a trustee to manage trust assets and oversee trust operations. You can act as your own trustee or appoint another individual or an institution to act on your behalf.  Institutional trustees usually charge a fee for their services, so be sure you ask about the cost.

CRTs can be a great planning tool. But get independent legal advice from a qualified estate planning attorney who can help you decide if a Charitable Remainder Trust is right for you.