Westchester Charitable Trusts Attorney

Charitable trusts are a powerful way to support causes you care about while also securing valuable tax benefits and maintaining control over how your assets are used. Whether your goals are rooted in philanthropy, estate planning, or tax reduction, a charitable trust offers flexibility, long-term impact, and financial efficiency. At Cavallo & Cavallo, we help Westchester residents create and manage charitable trusts that align with both personal values and financial objectives.

What Is a Charitable Trust?

A charitable trust is a legal arrangement that allows you to donate assets to a charitable organization while receiving tax advantages and, in many cases, retaining income or control during your lifetime. These trusts are typically used as part of an advanced estate or retirement plan and are often favored by individuals with high net worth or those looking to leave a lasting legacy.

There are two main types of charitable trusts:

• Charitable Remainder Trust (CRT) – You or your beneficiaries receive income from the trust for a set term or life, and the remaining assets go to charity after the term ends.
• Charitable Lead Trust (CLT) – The charity receives income for a specified period, and the remaining assets pass to your heirs at the end of the trust term.

Each option offers unique tax and planning advantages depending on your goals.

Benefits of Charitable Trusts

Charitable trusts offer a combination of personal, financial, and philanthropic benefits:

• Income tax deductions based on the present value of the gift
• Avoidance of capital gains tax when appreciated assets are contributed
• Reduction of estate and gift taxes
• Creation of lifetime income for you or your loved ones
• Long-term support for charitable causes you value
• Greater control over how your charitable gift is managed and used

We work with Westchester clients to tailor each trust to their specific family, tax, and charitable objectives.

Charitable Remainder Trusts (CRTs)

A Charitable Remainder Trust allows you to convert appreciated assets into a lifetime income stream while ultimately benefiting a charity.

How it works:

• You transfer assets (e.g., stocks, real estate) into the trust.
• The trust sells the assets without paying capital gains tax.
• You receive annual income (either fixed or variable) for life or a set term.
• At the end of the term, the remaining assets go to your designated charity.

There are two main variations:

• CRAT (Annuity Trust) – Pays a fixed amount annually.
• CRUT (Unitrust) – Pays a percentage of the trust’s value, recalculated annually.

CRTs are ideal for those with highly appreciated assets who want to avoid taxes, receive reliable income, and make a meaningful gift.

Charitable Lead Trusts (CLTs)

A Charitable Lead Trust operates in reverse: the charity benefits first, and your heirs receive what remains.

How it works:

• The trust pays annual income to one or more charities for a term of years.
• After the term ends, the remaining trust assets pass to your beneficiaries.
• You may reduce or eliminate gift and estate taxes on the transfer.

CLTs are often used to:

• Transfer wealth to children or grandchildren with reduced tax impact
• Support charities during your lifetime or for a defined period
• Reduce estate tax while retaining family control over the assets

CLTs are especially attractive in low-interest rate environments, where their tax advantages are amplified.

Funding a Charitable Trust

You can fund a charitable trust with a variety of assets, including:

• Appreciated securities
• Real estate
• Closely held business interests
• Cash or savings
• Artwork or collectibles (in some cases)

Proper funding is essential to maximize both the tax benefits and the trust’s long-term performance. We help ensure all assets are appropriately titled and valued.

Choosing the Right Charity

You can name any IRS-qualified 501(c)(3) public charity, foundation, religious institution, educational organization, or nonprofit. You may also:

• Support multiple charities through one trust
• Create a donor-advised fund to retain more control over grantmaking
• Establish your own private foundation for family-managed philanthropy

We guide you through charity selection, ensuring alignment with your values and compliance with legal requirements.

Tax Advantages of Charitable Trusts

Charitable trusts provide numerous tax benefits, including:

• Income tax deduction in the year the trust is created (subject to IRS limitations)
• Capital gains tax avoidance on the sale of appreciated property by the trust
• Estate tax reduction by removing assets from your taxable estate
• Gift tax reduction for wealth transferred to heirs through CLTs

We work closely with your accountant or financial advisor to coordinate and maximize these benefits as part of a comprehensive estate plan.

Charitable Trust Administration and Compliance

Once your trust is established, it must be administered properly to maintain tax-exempt status and legal compliance. Responsibilities include:

• Filing annual IRS Form 5227 or 1041
• Valuing trust assets and calculating distributions
• Making timely payments to charitable or non-charitable beneficiaries
• Keeping detailed financial and charitable records

We assist trustees with administration or serve as counsel to ensure your trust operates effectively and legally.

Frequently Asked Questions About Charitable Trusts

Can I name my family as income beneficiaries of a charitable trust?
Yes. In a CRT, you or your loved ones can receive income during life or for a term of years before the charity receives the remainder.

Can I change the charitable beneficiary later?
Sometimes. If the trust allows, you may reserve the right to name a different charity or support a class of charities.

Are charitable trusts only for the very wealthy?
No. While commonly used in high net worth planning, charitable trusts can benefit anyone with appreciated assets and charitable intent.

What if the charity closes or changes its mission?
You can include backup charities or name a class of eligible charities to avoid disruption.

Do I lose control of the assets?
Once transferred into the trust, the assets are no longer yours—but you retain control through trustee selection, payout terms, and charitable designations.

Serving Throughout Westchester, NY

• Scarsdale
• Bronxville
• Larchmont
• Rye
• Chappaqua
• Pelham
• Armonk
• Mamaroneck
• Dobbs Ferry
• Tarrytown

How Cavallo & Cavallo Can Help

Cavallo & Cavallo provides Westchester residents with experienced legal guidance for creating, funding, and managing charitable trusts. We help you:

• Select the right trust structure (CRT, CLT, or other)
• Identify qualified charitable beneficiaries
• Draft trust documents tailored to your goals
• Coordinate with your financial and tax advisors
• Ensure proper administration and IRS compliance

Whether you want to support a cause you care about or reduce taxes on a significant asset, we offer a clear and customized path forward.

Speak With a Westchester Charitable Trust Attorney

If you’re considering a charitable trust as part of your estate or tax planning, Cavallo & Cavallo is ready to help. Contact us today to speak with a Westchester charitable trust attorney and start building a legacy that reflects your values while protecting your financial future.