How charitable trusts and foundations work
Charitable remainder trusts, charitable lead trusts, and private foundations let you support causes you believe in while gaining tax benefits and continuing income for your family. The right structure depends on what you want your giving to actually do.
These are the questions that matter most when you’re thinking about charitable trusts and foundations.
What are the main types of charitable trusts?
Two structures cover most charitable trust planning. They differ in who gets paid first — your family or the charity.
| What it’s designed to do | Charitable remainder trust (CRT) | Charitable lead trust (CLT) |
|---|---|---|
| Income flows to you or your family first. | ||
| Remainder passes to charity at the end of the term. | ||
| Provides an immediate income-tax charitable deduction. | ||
| Useful for converting appreciated assets into income. | ||
| Income flows to charity first. | ||
| Remainder passes to your family at the end of the term. | ||
| Designed to reduce or eliminate transfer tax. | ||
| Useful for shifting future appreciation to heirs. |
How does a charitable remainder trust work?
You contribute appreciated assets, receive a charitable deduction now, and the trust pays you or your beneficiaries income for life or a term of years.
At the end of the term, the remainder passes to your chosen charity. CRTs are particularly useful for converting an appreciated, low-yield asset into an income stream while avoiding immediate capital gains tax.
How does a charitable lead trust work?
The CLT pays a charity each year for a set term. When the term ends, the remaining trust assets — often grown in value — pass to your family.
During the trust term
The charity gets paid each year
Annual payments flow to the chosen charity. Trust assets continue to grow tax-deferred. Your family is the remainder beneficiary. Trust runs for a set number of years.
After the trust term
The remainder passes to your family
Transfer tax is often reduced or eliminated. Appreciation is captured outside your estate. The charity has received meaningful annual support along the way.
Which charitable structure fits? Find out in 30 seconds.
Five short choices. Brent reads your answer back to you at the end.
A 30-second guided quiz. Get a personal read on whether a private foundation or a simpler tool fits.
How Brent helps you
- Walks you through which charitable structure fits your goals and your family
- Drafts CRTs or CLTs that capture the tax benefits and your giving intent
- Builds a private foundation when ongoing family-led giving is the right path
- Coordinates the charitable plan with the rest of your estate so the pieces work together
