Creating a lasting legacy of generosity can strengthen both your community and your estate plan. At Berkley Oliver PLLC, we help Kentucky families establish charitable trusts that support meaningful causes while providing significant benefits for their estates and beneficiaries. These powerful estate planning tools allow you to support the organizations you care about most while potentially reducing your tax burden and providing for your loved ones. 

Contact us today for a free case evaluation to learn how we can help you create a charitable giving strategy that makes a difference for generations to come.

Types of Charitable Trusts

When considering a charitable trust, you have several options to choose from, each offering distinct advantages for different situations. The two main types of charitable trusts are Charitable Remainder Trusts and Charitable Lead Trusts:

Charitable Remainder Trusts

Charitable Remainder Trusts come in two primary forms:

  • Charitable Remainder Annuity Trusts (CRATs) – These trusts provide you or your chosen beneficiaries with a fixed annual payment. After a specified period or upon your passing, the remaining assets transfer to your selected charitable organizations. CRATs work particularly well for those seeking reliable, predictable income while planning their charitable giving.
  • Charitable Remainder Unitrusts (CRUTs) – These trusts are similar to CRATs, but instead of a fixed payment, beneficiaries receive an annually recalculated percentage of the trust’s value. This structure allows payments to potentially increase over time as the trust assets grow in value, providing a hedge against inflation while supporting your charitable goals.

Charitable Lead Trusts

Charitable Lead Trusts also come in two different forms:

  • Charitable Lead Annuity Trusts (CLATs) – These trusts work in reverse of CRATs. The charity receives fixed annual payments for a set period, after which the remaining assets pass to your non-charitable beneficiaries, such as your children or grandchildren. CLATs can help reduce gift and estate taxes while supporting charitable causes during your lifetime.
  • Charitable Lead Unitrusts (CLUTs) – These are like CLATs, but the charitable beneficiary receives a percentage of the trust’s value each year rather than a fixed amount. This structure allows charitable giving to potentially increase as the trust assets appreciate, while still preserving wealth for future generations.

Benefits of Charitable Trusts

Creating a charitable trust offers numerous advantages that extend beyond supporting your favorite causes. Understanding these benefits can help you make informed decisions about incorporating charitable trusts into your estate plan.

Tax Advantages

Some of the tax advantages a charitable trust can offer include:

  • Federal income tax benefits – Contributing to a charitable trust can provide immediate income tax deductions. The size of your deduction typically depends on several factors, including the type of trust, the assets contributed, and current IRS regulations.
  • Federal estate tax benefits – Assets placed in a charitable trust can reduce your taxable estate, which can potentially offer significant tax savings for your heirs. This benefit becomes particularly valuable for estates approaching or exceeding federal estate tax thresholds.
  • Kentucky-specific tax considerations – While Kentucky does not impose an estate tax, residents should consider how charitable trusts interact with other state-specific tax matters, including income and property tax implications.

Non-Tax Benefits

The benefits of a charitable trust extend well beyond tax considerations. Other advantages include:

  • Legacy planning – Charitable trusts allow you to create a lasting impact on causes you care about, establishing a legacy that extends beyond your lifetime and reflects your values.
  • Family involvement – As you involve your children and grandchildren in charitable decisions, you can teach them about philanthropy and responsible wealth management while maintaining family unity around shared values.
  • Flexibility in giving – Charitable trusts offer various ways to structure your giving, which can allow you to balance charitable goals with family needs. As such, you can maintain control over how your assets benefit both charity and loved ones.

Setting Up a Charitable Trust

Creating a charitable trust requires careful planning and attention to detail. The estate planning attorneys at Berkley Oliver PLLC can guide you through each step to help your trust achieve your charitable and financial objectives. Our team will work with you to select the most appropriate trust structure based on your specific goals, income needs, and tax situation. This decision forms the foundation of your charitable giving strategy.

The next step is to choose both charitable and non-charitable beneficiaries. Our attorneys will help you evaluate potential charitable organizations to verify that they qualify under IRS regulations and align with your giving objectives.

The team at Berkley Oliver PLLC can assist you with:

  • Understanding legal requirements 
  • Handling all necessary documentation 
  • Coordinating with your financial advisors

Integration with Estate Planning

Your charitable trust should work in harmony with other estate planning documents, including your will, living trust, and powers of attorney. Our team will help all elements of your estate plan support your overall objectives while avoiding potential conflicts or unintended consequences.

We understand the importance of balancing charitable giving with family needs. Through careful planning, the team at Berkley Oliver PLLC can create a strategy that provides for both your loved ones and your chosen charities. This might include combining charitable trusts with other tools (such as life insurance or family trusts) to achieve your goals.

While charitable trusts are typically irrevocable, we can help structure them to maintain some flexibility in responding to changing circumstances and family needs over time.

Contact Berkley Oliver PLLC for Help Establishing a Charitable Trust

Charitable trusts offer powerful tools for supporting the causes you care about while providing significant benefits for you and your family. At Berkley Oliver PLLC, we work closely with each client to understand their charitable intentions and develop strategies that make the most of available planning opportunities. Our goal is to help you create a lasting charitable legacy while maximizing the benefits for both your chosen charities and your loved ones.

Ready to explore how a charitable trust could benefit your estate plan? Contact Berkley Oliver PLLC today for a free case evaluation.