Advantages of a Charitable Trust: Support Philanthropy and Your Family

We all want to support critical causes and other passion projects. But, often, it’s hard to strike a balance between helping these important organizations and preserving your family’s wealth and assets. The simple solution? Increasingly, it’s becoming targeted charitable trusts, designed to balance investors’ desire to do good with their desire to safeguard their families’ futures.

Understanding Charitable Trusts

Charitable trusts not only allow donors to direct funds toward specific charities and causes they support but, also, drives lucrative income and estate tax benefits for contributors. For wealthy families, this may result in hundreds of thousands of dollars in savings per year while, at the same time, leaving a positive mark on your community and the world as a whole.

The Different Types of Charitable Trusts

Charitable trusts allow supporters to set aside funds for one or more philanthropic purposes. There are two types of “split-interest” trusts: charitable remainder trusts (CRTS) and charitable lead trusts (CLTs). These funds give a portion of the investment to the charity or charities of a donor’s choosing, plus set a portion aside for a non-charitable beneficiary.

The main difference between the two is when the beneficiaries review their funds. CLTs give the beneficiaries income interest for a set number of years or over the course of a person’s lifetime and releases the remaining funds at the end of the trust term. CRTs, meanwhile, the non-charitable beneficiary receives the income interest, and one or more charitable organizations receive the remainder of the assets. These two types of charitable trusts let donors control how much of the funds the beneficiaries receive and when, and how much their heirs benefit from the trust.

The Benefits of Charitable Trusts

Given their unique structure and versatility, there are lots of benefits that come from investing in charitable trusts, including:

Tax deductions

Income tax benefits tied to charitable trusts depend on the type of trust as well as applicable tax codes -- which, recently, have changed considerably. In most cases, donors can either receive a partial income tax deduction based on the total value of the assets they intend to invest, or they can receive the entire charitable income tax deduction the year the funds are dispersed. Keep in mind, charitable trusts are not tax exempt but, at the same time, they give donors the opportunity to preserve highly appreciated assets, reduce estate taxes and qualify for income tax deductions.

Maintain the value of appreciated assets

Individuals with highly-appreciated assets and non-income producing property can preserve the value of their asset by selling them within the charitable trust. This, then, makes the asset tax-exempt and preserves their full market value, subject it to capital gains taxes.

Reduce estate taxes

Donor assets used to fund these trusts typically come from investors’ estate. By reallocating these funds to the trust, donors can reduce the amount of tax their estate has to pay at the time of death which, immediately, preserves wealth for future generations. Funds in charitable trusts may also qualify for a gift tax deduction.

Income streams from physical assets

If a donor has a property that doesn’t produce income but they’d like to use it for income purposes, it’s easy to sell and put the remainder into the trust. In turn, this creates an income stream that benefits the donor directly -- again, another unique attribute of these funds. Donors can also opt to wait and take the income until their tax bracket is lower.

Charitable trusts require planning and an initial setup but, from there, tend to be very easy to maintain and support over time, while supporting two diverse -- and, often, competing -- interests. Consult your financial advisor to learn more and to structure your charitable trust so it best serves your wants and needs, now and in the future.

5 Things You Should Know About a Donor-advised Fund

Donor-advised funds -- or “DAFs,” as they’re often called -- are philanthropic platforms created at public charities. Once established, these funds enable donors to make charitable contributions and, with them, reap immediate tax benefits similar to other investment funds.

Though DAFs first surfaced in the 1930s, there was no formal structure in place until 1969. Over the last 20 to 30 years, though, DAFs have grown significantly in both use and visibility -- in 2016, Americans contributed more than $23 billion to DAFs, an 18% increase in just two years.

If you’re considering establishing a DAF, it’s essential to understand the ins and outs of these funds. Though many of the benefits mimic more traditional charitable giving options, there are some perks and considerations exclusive to DAFs -- understanding them will help you determine if this is the right route for you and your personal assets.

#1. You Recommend Grants

One of the most unique features of DAFs is that, once they’re up and running, work as a sort of charitable savings for the donor. Funds are contributed and, from there, the donor can make recommendations as to who and what receives future grants -- typically, these recommendations sync with the donor’s personal preferences and personal charities of choice.

#2. Funds are Irrevocable

That said, there’s one direction funds can’t flow once contributions are made -- back to the donor. All personal assets contributed to a DAF are irrevocable. While the donor can make strong recommendations as to charities and nonprofits in line for these funds, there’s no option to withdraw or otherwise take back investments -- from day one, the funds belong to the DAF exclusively.

#3. Investments Grow Tax-free Over Time

As a DAF donor, you’ll receive immediate tax benefits for your contributions. With each contribution, you’ll gain additional tax savings while, at the same time, those funds and assets grow tax-free over time. This enables your assets to “work harder,” and create greater impact once distributed.

#4. Smaller-scale Giving is Welcome

Unlike many charitable funds, DAFs don’t require massive financial commitments. While many DAF structures require a six-figure minimum to enlist an investment advisor, if you’re planning to self-direct the account you can get started for significantly less. This enables givers to grow their charity-intended money tax-free over time, and make a gift when they feel it’s right.

Another perk to lower minimums? People whose income isn’t as consistent can give more in some years and less in others, ultimately working towards a fund goal over time versus in the immediate.

#5. There’s No Set Timing

Technically, DAFs can grow in perpetuity, which is a major distinction from foundations. While foundations must give out at least 5% of their net investment assets each year, DAFs don’t have these requirements -- in theory, a donor could make the contributions and sit on the fund for years or even decades, all while generating the tax benefits tied to charitable giving. Again, the funds belong to the DAF so they will, eventually, be distributed. But, at the same time, benefits will be realized when funding happens, not when the charitable gift it issued.

Ultimately, DAFs offer donors tremendous flexibility in everything from contribution amounts to gift allocations to timing, all while delivering significant tax benefits. For many givers, this is a compelling route to take, ensuring their funds can grow and best serve the charities and nonprofits of their choice. To learn more, schedule a meeting with the Wiseheart Foundation where we can review your charitable giving options -- including DAFs -- one-on-one.

What is a Charitable Trust?

At its most basic, a charitable trust is a set of assets signed over by a donor to create and maintain a charitable interest. Once established, assets are managed by the trust administrator with generated assets being utilized to support an organization’s philanthropic mission.

Understanding the Types of Charitable Trusts

The specific type of charitable trust ultimately dictates the short- and long-term structure. For charitable remainder trusts, assets are directed to the identified charity at the end or of the trust period, generally at the end of life. Growth of the trust during the trust period is directed to a specific purpose and can include the financial support of the donor or another purpose. In the case of the Bill and Melinda Gates Foundation Trust, for example, the expiration extends to 50 years after their deaths.

Remainder trusts can come with short or longer periods of time depending on the desires of the donor and the charity. However, once the period runs out, all assets and associated interest become property of the charity.

While the other form of charitable trusts -- lead trusts -- are very similar, there is one glaring difference: the donor retains control of the assets given to the charity or organization. Similarly, interest may be considered property of the donor -- in some cases, it goes to the charity while, in others, it’s split between the donor and the charity.

At the end of the established period, the assets and interest are taken from the charity and given to a designated party chosen by the donor. This is, often, a beneficiary, heir or relative, but may be the supported charity also.

The Benefits of Charitable Trusts

There are countless benefits to establishing a charitable trust. For starters, there’s the emotional benefit of doing so much good. Donors are using their assets to help their community at large -- that alone is powerful and overwhelmingly positive.

Beyond that, though, there are the tangible and ongoing benefits that come from starting a charitable trust. Assets given to the trust are tax deductible, which can greatly reduce a donor’s tax burden. Moreover, in the case of lead trusts, when the trust expires and assets pass back to the donor’s heirs or other designated parties, the mandatory estate and gift taxes are much lower than they would be through traditional inheritance channels.

For many, the latter is one of the unique benefits of establishing a charitable trust. Very few estate planning methods enable a donor to take decisive philanthropic action while, at the same time, safeguarding their wealth for future generations. What’s more, by pairing a donor-advised fund with a split-interest trust, families can gain critical benefits of both an income stream and charitable giving.

For more information contact the WiseHeart Foundation at 901.410.3608 or at

Another Update from the Congo

Hello from Kindu, Democratic Republic of the Congo. I apologize for the slow rate in updating my blog, but communication here is almost non-existent.

Kindu is the center of United Nations Security Forces fighting the ongoing insurgency and the basic lack of government in this region. Women and children are the object of attack for so many of the insurgent forces and it is overwhelming to see the horrible impact of these atrocities.

The DRC is the rape capital of the world. So many of the women have had their husbands murdered in front of them and their children. Then the women and some of the children have been raped and sexually exploited. Once this happens, they are considered outcasts by both sides of this conflict. We hope through this trip to further support building a center for those affected by this violence to once again enter society and live a fruitful life.


We have had much difficulty getting here. Travel in the Congo is a challenge at best. It seems that at every corner, the government challenges the attempts to provide the necessary information to make this project "work." Nevertheless, we are making progress.

Yesterday upon our arrival, we were greeted by more than 2,000 children singing and dancing while lining the road to the proposed center. The ladies walked with us around the road of the area singing songs of joy and praise for our presence. It was most humbling.

Today we worshipped with the leadership of the church community, walked the proposed center site and will be interviewing the brick makers who are already at work. Tomorrow we will interview many of the victims and leadership for the effort before going to West Congo to meet with leadership there.

The proposed center will allow for training, counseling and support of victims for up to three months. It is desperately needed and will cost approximately $350,000 to complete. I believe we can do it together. Please come back for more as we are able.