Potential downsides of a Charitable Remainder Trust?
The only real downside of a CRT is that it is irrevocable. Other than receiving the annual payout, you cannot get the principal back. In addition, when you are gone the assets go to the charity(ies) you have named, instead of to your heirs, such as your children. Therefore, it is important to be very careful in setting up the CRT, and you should not put all your assets in to a CRT.
However, if you create a CRT and live past a certain point, your family will be better off. This results because you will have saved up and invested so much more because of your extra cash flow from the CRT that such cash invested will far exceed the amount your heirs would have received if you had sold the asset. Furthermore, if you are concerned about an early death, you can protect your heirs through life insurance paid for out of your extra cash flow from the CRT as discussed below.