Editing Charitable trust (section)

==United States==
In the United States, many individuals use charitable trusts to leave all or a portion of their estate to charity when they die, both for philanthropic purposes and for certain tax benefits. Charitable trusts can be set up ''inter vivos'' (during a donor's life) or as a part of a trust or will at death (testamentary). There are two basic types of US charitable trusts: charitable remainder trusts (CRT) and charitable lead trusts (CLT). Additionally, there is an Optimized Charitable Lead Annuity Trust (OCLAT) designed to maximize the tax and economic benefits for the contributor.<ref>{{Cite web|url=https://irp.cdn-website.com/30873e50/files/uploaded/optimized-clat.pdf|title=The Optimized CLAT: A Compelling Income Tax Deduction Vehicle Hiding in Plain Sight {{!}} Estate Planning Journal|language=en-US|access-date=2022-09-12}}</ref>

{{anchor|charitable remainder trust}}Charitable remainder trusts are irrevocable structures established by a donor to provide an income stream to the income beneficiary, while the public charity or private foundation receives the remainder value when the trust terminates. These "split interest" trusts are defined in §664 of the [[Internal Revenue Code]] and are normally tax-exempt. A Section 664 trust makes payments either of a fixed amount ([[Charitable Remainder Annuity Trust|charitable remainder annuity trust]]) or a percentage of trust principal ([[charitable remainder unitrust]]),<ref>{{Cite web|url=https://www.law.cornell.edu/uscode/text/26/664|title=26 U.S. Code § 664 - Charitable remainder trusts|website=LII / Legal Information Institute|language=en|access-date=2019-04-11}}</ref> to either the donor or another named beneficiary. If the trust qualifies under the IRS code, the donor may claim a charitable income tax deduction for their donation to the trust. Moreover, the donor might not need to pay an immediate [[capital gains tax]] when the trust disposes of the appreciated asset and purchases other income-generating assets to fund the trust. At the end of the trust term, which may be based on either lives or a term of years, the charity receives whatever amount is left in the trust.<ref>{{Cite web|url=https://estate.findlaw.com/trusts/charitable-trust.html|title=Charitable Trust|website=Findlaw|language=en-US|access-date=2019-04-11}}</ref> Charitable remainder unitrusts provide flexibility in the distribution of income and may be helpful in retirement planning, while charitable remainder annuity trusts paying a fixed dollar amount are more rigid and typically appeal to much older donors unconcerned about inflation's impact on income distributions, and who are using cash or marketable securities to fund the trust.<ref>{{Cite web|url=https://www.stlawfirm.com/Estate-Planning-Learning-Center/Charitable-Remainder-Trusts.shtml|title=Charitable Remainder Trusts: An Overview {{!}} Sjoberg & Tebelius Oak Park Heights, MN|website=Sjoberg & Tebelius, P.A.|language=en-US|access-date=2019-04-11}}</ref> In some situations, the less complicated [[pooled income fund]] may be more suitable than the charitable remainder trusts.<ref>{{cite web |last1=Eisenberg |first1=Lawrence J. |title=Maximizing Split-Interest Charitable Deductions With New Pooled Income Funds Over CRTs |url=https://www.kitces.com/blog/charitable-pooled-income-fund-new-npif-tax-deduction-7520-interest-rate-crt-comparison/ |website=kitces.com |publisher=Kitces Research |access-date=1 September 2023 |date=9 June 2021}}</ref>

{{anchor|charitable lead trust}}Charitable lead trusts are the opposite of charitable remainder trusts and make payments to charity for the term of the trust. Similar to a charitable remainder trust, payments may be either a fixed amount (charitable lead annuity trust) or a percentage of trust principal (charitable lead unitrust). At the end of the trust term, the remainder can either go back to the donor or to heirs named by the donor. The donor may sometimes claim a charitable income tax deduction or a gift/estate tax deduction for making a lead trust gift, depending on the type of charitable lead trust. Generally, a non-grantor lead trust does not generate a current income tax deduction, but it eliminates the asset (or part of the asset's value) from the donor's estate.<ref>{{Cite web|url=https://www.fidelitycharitable.org/philanthropy/charitable-lead-trusts.shtml|title=Charitable Lead Trusts|website=Fidelity Charitable|language=en|access-date=2019-04-11}}</ref>