Bronx Charitable Trusts Attorney
If giving back is an important part of your legacy, a charitable trust can be a powerful way to support causes you care about while also receiving tax and estate planning benefits. Whether you want to reduce estate taxes, provide for your family, or fund long-term charitable projects, a charitable trust offers flexibility and purpose. At Cavallo & Cavallo, our Bronx charitable trust attorneys help individuals and families create charitable trusts that align with their values and financial goals.
What Is a Charitable Trust?
A charitable trust is a type of irrevocable trust designed to benefit a qualified charitable organization. Depending on how it’s structured, a charitable trust can provide income to you or your beneficiaries for a set time, with the remainder going to charity—or the other way around.
The two most common types of charitable trusts are:
- Charitable Remainder Trust (CRT): Provides income to non-charitable beneficiaries (like yourself or your family) for life or a set term, with the remaining assets going to a charity at the end of the trust period.
- Charitable Lead Trust (CLT): Provides income to a charity for a specific period, after which the remaining assets are distributed to your beneficiaries.
Each type offers distinct tax and planning advantages depending on your situation and goals.
Why Consider a Charitable Trust?
Charitable trusts are ideal for individuals who want to make a lasting impact on a cause they believe in, while still managing their wealth and taxes wisely.
Benefits of establishing a charitable trust include:
- Supporting one or more charities of your choice
- Reducing estate and gift taxes
- Potentially avoiding capital gains tax on highly appreciated assets
- Receiving a current income tax deduction
- Retaining income for yourself or your loved ones
They are especially useful for donors with valuable assets such as real estate, stocks, or retirement accounts who want to give while maximizing tax efficiency.
How Charitable Trusts Work
The process begins with transferring assets into a trust that will benefit one or more charities, either during your lifetime or after your death. Once the assets are in the trust, they are removed from your estate, which can lower your taxable estate and help avoid probate.
Here’s a basic breakdown of how each trust functions:
Charitable Remainder Trust (CRT):
- You donate assets to the trust and receive an income stream for life or a set number of years.
- After the trust term ends, the remaining assets go to the designated charity or charities.
- This trust is often used to convert appreciated assets into income without immediate capital gains taxes.
Charitable Lead Trust (CLT):
- The charity receives an income stream during the trust term.
- At the end of the term, the remaining assets go to your family or other non-charitable beneficiaries.
- This type is commonly used to reduce the taxable value of gifts to heirs.
Each type must follow strict IRS rules regarding timing, payments, and valuation to qualify for tax benefits.
Assets Commonly Used in Charitable Trusts
Charitable trusts work best with highly appreciated or income-producing assets. These may include:
- Publicly traded stocks
- Real estate (residential, commercial, or investment property)
- Mutual funds or ETFs
- Business interests
- Cash or retirement funds (subject to RMD and tax considerations)
Donating appreciated assets through a charitable trust can help avoid or reduce capital gains taxes while still providing financial benefits to the donor or their heirs.
Charitable Trusts and Estate Planning
In addition to philanthropy, charitable trusts are a sophisticated estate planning tool. They reduce the size of your taxable estate while allowing you to support both your family and your favorite causes.
Charitable trusts can be used alongside:
- Wills and revocable living trusts
- Life insurance policies
- Family trusts or special needs trusts
- Business succession plans
- Foundations and donor-advised funds
At Cavallo & Cavallo, we ensure that your charitable trust integrates seamlessly with your overall estate plan and complies with all applicable New York and federal laws.
Choosing the Right Charitable Beneficiaries
When creating a charitable trust, it’s important to select a qualified organization that aligns with your values. Qualified charities must be recognized as tax-exempt under IRS code 501(c)(3).
Your chosen beneficiaries can include:
- Local Bronx community organizations
- Religious institutions
- Educational or scholarship foundations
- Arts, health, or social justice organizations
- National or international charities
You can name one or more charities, designate successors, or even allow a trustee to select recipients within your preferred field of giving.
Frequently Asked Questions About Charitable Trusts
Do I lose control of the assets once they’re in the trust?
With an irrevocable charitable trust, you no longer own the assets—but you or your beneficiaries may still benefit from the income stream, depending on the type of trust.
Can I change the charity later?
In some cases, you can reserve the right to change the charitable beneficiaries through a power of appointment or by naming a donor-advised fund as the beneficiary.
Do charitable trusts work well for real estate?
Yes, especially for highly appreciated real estate. A charitable trust allows you to avoid capital gains taxes upon sale, generate income, and leave a charitable legacy.
What tax deductions are available?
You may receive an immediate income tax deduction for the present value of the charitable gift. The deduction amount depends on IRS formulas based on age, payout rate, and trust type.
Are charitable trusts subject to probate?
No. Assets in a properly established charitable trust avoid probate, which provides privacy and speeds up the transfer of assets to beneficiaries.
Can I use a charitable trust to create a scholarship fund?
Yes, a charitable trust can be used to fund education or create scholarships, either directly or through a charitable foundation or educational institution.
Serving Throughout The Bronx
- Riverdale
- Spuyten Duyvil
- Pelham Bay
- Morris Park
- Throggs Neck
- Kingsbridge
- Woodlawn
- Parkchester
- Bedford Park
- Fordham
How Cavallo & Cavallo Can Help
Creating a charitable trust involves legal, financial, and tax planning considerations. At Cavallo & Cavallo, we help clients throughout the Bronx create charitable giving strategies that reflect their values while maximizing tax and estate planning benefits.
Our services include:
- Drafting and establishing charitable remainder and lead trusts
- Coordinating with financial advisors and tax professionals
- Evaluating charitable goals and selecting beneficiaries
- Integrating charitable trusts into your estate plan
- Assisting with trust administration and compliance
We offer thoughtful, personalized guidance to ensure your generosity continues to make a difference for generations to come.
Start Your Charitable Legacy Today
If you’re ready to combine smart planning with meaningful giving, a charitable trust could be the right solution. Speak with the experienced Bronx trust lawyers at Cavallo & Cavallo to explore how charitable trusts can benefit your estate plan, your loved ones, and the causes that matter most to you. Contact us today to schedule a consultation and start building a legacy of generosity.
