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Sep 15, 2026
There are few things more satisfying than doing something to help others. Establishing charitable trusts in Florida is an effective way to do just that while simultaneously incurring tax benefits for you and your beneficiaries.
What Is a Charitable Trust?
A charitable trust is a legal document that allows you to transfer assets to a trustee to manage them on behalf of a beneficiary charitable organization. These trusts offer tax benefits, such as avoiding capital gains tax, and provide income streams while simultaneously helping you create a family legacy. To be considered a charitable trust, one or more of the beneficiaries of the trust must be:
- A public charity
- A nonprofit organization
- A private foundation
Types of Charitable Trusts
Charitable trusts can be split-interest, meaning that some of the beneficiaries are charitable, while others are not. There are two types of split-interest charitable trusts:
- Charitable lead trusts. Charitable lead trusts place charity benefits first. These trusts operate for a predetermined number of years, or for a grantor’s lifetime, making direct periodic payments to charities of the donor’s choosing for the prescribed period. At the end of that time, the donor’s heirs receive any remaining assets. The donor receives an immediate charitable deduction on their tax return for the total value of the gift when the trust is established.
- Charitable remainder trusts. Charitable remainder trusts allow charities themselves to serve as trustees. They are then responsible for investing and managing the trust funds. The charity pays any income to the beneficiary, who could be either the donor or someone selected by the donor. The beneficiary receives income for a predetermined number of years, or for their lifetime, and the charity receives the trust’s remaining assets at the end of the term.
There is also a distinction made between charitable remainder annuity trusts and unitrusts in the Sunshine State. If the trust makes regular payments of a fixed amount, it’s an annuity trust. If it pays a percentage of the trust’s value, it’s a unitrust.
Benefits of Charitable Trusts
There are 109,407 nonprofit organizations in the Sunshine State, many of which benefit from charitable trusts. In addition to helping to do good in the world, charitable trusts also:
- Create a family legacy. Charitable trusts can create an ethic of giving that could be passed on to younger generations.
- Receive an income stream. Some charitable trusts also provide income streams for grantors or other beneficiaries.
- Incur tax benefits. Charitable trusts allow grantors who own property that isn’t producing income to turn it into cash that can be reinvested without having to pay capital gains tax. Charitable trusts can be important in tax planning for your estate.
In addition to avoiding capital gains tax on the sale of appreciated assets, charitable trusts also may allow you to avoid the probate process and reduce estate taxes if your estate exceeds the IRS’s exemption limit. Charitable trusts can have significant tax and legal implications. It’s important to work with an experienced estate planning attorney to determine whether a charitable trust is right for your circumstances.
Factors to Consider When Establishing a Charitable Trust
In addition to considering trust laws, your attorney should consider several factors when creating a charitable trust. They include:
- Income streams
- Market forces
- Your life expectancy
- Your current income
- The expected longevity of the charity
To fund the trust, you may want to use real estate or a life insurance policy. Charitable trusts are typically irrevocable trusts, which means once they come into operation, they can’t be altered. You should be certain about your decision to give to your chosen charity before you establish the trust and fund it.
If you plan to establish an annuity trust, you must consider carefully what to set the annuity at. You could deplete the principal of the trust if you set it too high, whereas setting it too low means you may not see the full benefit of setting up the trust. As a result of this complexity, most charitable remainder trusts are unitrusts. For this type of trust, the beneficiary must receive at least 5% of the value each year.
FAQs
What Are the Disadvantages of Using a Trust for Estate Planning?
The primary disadvantages of using a trust for estate planning are the high upfront costs and the ongoing administrative complexity associated with doing so. In addition to paying an attorney to help you establish the trust, you may also have to pay county recording fees or title transfer fees to move property into the trust’s name. Managing a trust can incur annual trust fees, legal advice costs, and tax preparation fees.
What Type of Trust Is Ideal for Estate Planning?
The type of trust that is ideal for estate planning varies depending on your goals. Many people use revocable living trusts as the foundation for general estate planning, but irrevocable living trusts also serve a valuable role. Charitable trusts are a type of irrevocable living trust. Common types of charitable trusts used in estate planning include charitable lead trusts and charitable remainder trusts,
How Do Charitable Trusts Work?
Charitable trusts work by allowing you to transfer assets to a trustee to support one or more tax-exempt charities while securing tax advantages and potentially providing income for yourself or your heirs. Depending on what kind of trust you establish, the primary beneficiary could be a charitable institution or your family members and other heirs, with the charity receiving the remainder of the money available after the trust ends.
Hire a Trust Lawyer
If you want to establish a charitable trust, your first step should be to hire a trust lawyer. The team at the Law Office of Douglas A. Oberdorfer, P.A., is here to help. We have been in practice for over 20 years, and in that time, we have helped many clients establish charitable trusts that help them meet their philanthropic goals while simultaneously incurring tax benefits. We can help with your trust case, too. Contact a Florida trust attorney from our office today.
