Charitable trusts are wealth planning vehicles with advantageous tax benefits for philanthropic families or individuals who wish to donate to charitable organizations.
There are two main forms of charitable trusts: a charitable remainder trust (CRT) and a charitable lead trust (CLT). Each charitable trust type serves a separate purpose and differs in the timing of when charitable and non-charitable beneficiaries will receive distributions.
Charitable Remainder Trust (CRT)
- Provides a designated amount to the grantor (the trust creator) or non-charitable beneficiary(ies) for a specified term
- The balance of the trust passes to a charitable organization(s) after expiration of the specified term
- May lower the income tax liability of the grantor
- Reduces the grantor’s taxable estate at death
Charitable Lead Trust (CLT)
- Provides a designated amount to a charitable organization(s) for a specified term
- The balance of the trust passes to non-charitable beneficiaries at the after expiration of the specified term
- May lower the income tax liability of the grantor
- Reduces the grantor’s taxable estate at death
Next Steps
Charitable trusts can be highly complex wealth-transfer vehicles. For additional information about how these types of trusts might help you achieve your philanthropic and estate planning goals, please contact your estate planning attorney.
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