Charitable Trusts
Provide Income | Transfer Wealth

Charitable trusts can be designed to meet any number of different needs. The most flexible of all giving plans, they are tailored to the individual's needs and desires. Two common uses for a trust are listed below.

Provide Income
A charitable remainder trust (CRT) provides an income stream to the donor, or to someone the donor designates. It can be arranged to pay a specific dollar amount or a percentage of the value of the trusts.

The income stream can go to any non-charitable beneficiary. Usually this is the donor (and spouse), but the donor may choose another person. Sometimes donors set up a CRT in their will to provide for a loved one that has depended on them, such as disabled child or an elderly family member. Depending on the trust, the income payments may continue for a designated number of years (up to 20) or for the life of the income beneficiary.

When the trust terminates because the income payments have stopped (either the term of years has ended, or the beneficiary is deceased) the remainder of the assets in the trust are given to the charities of the donor's choice.

Transfer Wealth
Sometimes donors wish to transfer property to their children during their lifetime (such as a piece of real estate or a family business).

A charitable lead trust (CLT) is almost the reverse of the charitable remainder trust. In this type of trust, the "income" payments go to a designated charity (or charities) for a number of years. Again, these payments can be for a specific dollar amount or a percentage of trust assets.

When the term of years has ended, the remaining assets in the trust are transferred back to the donor, or to the donor's heirs. This vehicle provides donors with the ability to make a charitable gift and to transfer property to their heirs without paying unnecessary gift taxes.

This trust can also be set up through a will.