Choosing the Right Trust: CRTs vs CLTs

Many donors want to support our work while providing for loved ones or meeting other planning goals. A charitable trust is a powerful giving tool that can provide many benefits for you and for us. The type of trust you choose depends on your personal goals.

The two main types of charitable trusts are essentially mirror images of each other.

With a charitable remainder trust (CRT):

You transfer cash or appreciated assets to the trust.

• The trust makes income payments to your designated beneficiary (or beneficiaries) for life or for a period up to 20 years.
• When the income payments are complete, the trustee distributes the remainder to us.

This may be the right option if you are holding a highly appreciated asset (say, a stock). By funding a CRT with such an asset, you can reduce your capital gains tax while providing a secure income for beneficiaries and meeting your philanthropic goals.

With a charitable lead trust (CLT):

You transfer cash or appreciated assets to the trust.

• The trust pays out annual gifts to us over a specified number of years.
• When the charitable payments are complete, the trustee distributes the remainder to your named beneficiaries (often, children or grandchildren).

This may be the right option if you are holding a highly appreciated asset that you want to keep in the family, but you want to minimize any tax burden on the recipients. By funding a CLT with such an asset, you can use the asset to support a meaningful charity like ours before eventually passing ownership to family members.

Charitable trusts are powerful giving and planning tools. Whether securing an income stream through a CRT or minimizing transfer tax burdens with a CLT, charitable trusts are the gifts that keep on giving.