A charitable trust is created to meet tax and estate planning goals. It provides current and future tax benefits including income tax, capital gains tax, gift tax and estate tax. They can be created during a client's lifetime in the form of an irrevocable trust or as a testamentary trust under a Last Will and Testament. Charitable trusts are often used to direct a significant donation to a favorite charity, provide the charity with an income stream or set up a memorial scholarship. The most common types of charitable trusts are charitable remainder and charitable lead.
What is a Charitable Trust?
CHARITABLE REMAINDER TRUST
An irrevocable trust that generates an income stream for the grantor and their beneficiaries, with the remainder of the donated assets going to one or more nonprofit organizations of the grantor's choice. A charitable remainder trust lets the grantor give now, deduct now and deliver the gift at a later date.
CHARITABLE LEAD TRUST
An irrevocable trust that generates an income stream for the nonprofit organization of the grantor's choice, with the remaining assets going to the grantor's family or other beneficiaries. A charitable lead trust lets the grantor give now, deliver the gift now, deduct now and get the remainder of the donated asset returned for the grantor's beneficiaries.
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