Charitable Giving Strategies in Estate Planning: How to Leave a Legacy That Lasts

Charitable giving strategies let an Ohio estate plan direct part of an estate to causes a person values, often while easing income or estate tax exposure. Charitable remainder trusts, charitable lead trusts, donor advised funds, and simple bequests are the most common tools, each suited to different income, tax, and legacy goals.

Estate planning is not only about passing assets to a spouse or children. For many families, it is also a chance to support a church, school, medical research organization, or community foundation in a way that outlasts a single lifetime. The Team at Rhodium Law works with Ohio families across all 88 counties to weave charitable intentions into a broader plan, alongside estate planning tools like wills, trusts, and powers of attorney.

What Is a Charitable Remainder Trust?

A charitable remainder trust (CRT) is an irrevocable trust that pays income to a donor or another named beneficiary for life or a term of years, then distributes whatever remains to one or more qualified charities. The donor typically funds it with appreciated property and receives an income tax deduction in the year the trust is created.

A charitable remainder trust names a charity as the eventual owner of the remainder interest. Federal law sets guardrails on how these trusts operate: under 26 U.S.C. Section 664(d), a charitable remainder trust must pay its income beneficiary at least 5 percent, but no more than 50 percent, of trust assets each year, and the value of the charity’s projected remainder interest must equal at least 10 percent of what was originally placed in trust. Because the trust is irrevocable, transferring assets into it removes them from the donor’s probate estate while the donor, or another named beneficiary, still draws an income stream.

How Does a Charitable Remainder Trust Work?

A charitable remainder trust works by the donor transferring cash, securities, real estate, or business interests into the trust, which then sells the assets, reinvests the proceeds, and pays the donor or another beneficiary a set income stream. When the trust term ends, the trustee distributes the remaining principal to the named charity or charities.

A charitable remainder annuity trust (CRAT) pays a fixed dollar amount every year and does not accept additional contributions once it is funded. A charitable remainder unitrust (CRUT) pays a fixed percentage of the trust’s value, revalued annually, and can accept additional gifts over time. Because the trust sells appreciated assets inside a tax exempt vehicle, it can spread the capital gains tax impact a donor would otherwise owe on an outright sale across the payments received over the trust’s term. Coordinating that funding step with the rest of a plan is part of good trust funding practice.

What Is a Charitable Lead Trust?

A charitable lead trust is the mirror image of a charitable remainder trust: it pays income to one or more charities for a set term, then distributes the remaining principal to the donor’s family or other noncharitable beneficiaries. It can reduce gift and estate tax exposure on assets a family expects to grow in value.

A charitable lead annuity trust pays the charity a fixed dollar amount each year, while a charitable lead unitrust pays a fixed percentage of the trust’s value as revalued annually. Families sometimes fund a charitable lead trust with assets they expect to appreciate, because growth above the required charitable payments can pass to heirs with reduced gift or estate tax cost. As with any irrevocable structure, careful trust funding is essential to make sure the intended property actually transfers into the trust.

What Other Charitable Giving Strategies Belong in an Ohio Estate Plan?

Beyond charitable trusts, an Ohio estate plan can include a straightforward charitable bequest in a will or living trust, a donor advised fund that lets a family recommend grants over time, or a simple beneficiary designation naming a charity on a retirement account or life insurance policy.

Giving USA, the annual report published by the Indiana University Lilly Family School of Philanthropy, found that individual giving in the United States totaled an estimated $319.04 billion in 2022, showing how deeply charitable giving remains woven into household financial planning. A charitable bequest names a charity directly inside a living trust or will, and because a properly funded trust passes outside probate, the gift can reach the charity without a court proceeding. See probate avoidance planning for how that timing works.

What Are the Pitfalls of a Charitable Remainder Trust?

The main pitfalls of a charitable remainder trust are its irrevocability, ongoing administrative cost, and the fact that income payments to the noncharitable beneficiary are generally taxable. Once funded, a donor cannot simply undo the trust or redirect the remainder to a different beneficiary outside the terms the trust document allows.

Distributions from a charitable remainder trust are taxed to the recipient under a four tier system set out in the Treasury regulations, which characterizes payments as ordinary income, capital gain, other income, then trust principal, in that order. Because the trust is irrevocable, a donor should confirm the payout rate, term, and charitable beneficiary reflect long term intentions before funding it, and should coordinate the trust with the rest of the estate plan, including any asset protection goals for other property.

How Do You Set Up a Charitable Trust in Ohio?

Setting up a charitable trust in Ohio starts with choosing the trust type, drafting trust terms that meet federal tax requirements, and funding the trust with the intended property. Ohio law also requires many charitable trusts to register with the Ohio Attorney General’s Charitable Law Section.

An organization generally must register before soliciting charitable contributions in Ohio. A newly created Ohio organization generally must register within six months after creation and before soliciting. Registration timing, reporting duties, and exemptions depend on the organization’s structure and activities, so the requirements should be confirmed for the particular organization. Ohio does not impose its own state estate tax, a change that took effect in 2013, so charitable planning in Ohio focuses primarily on federal income, gift, and estate tax rules rather than a separate state transfer tax. The federal exemption also changed substantially for 2026: the One Big Beautiful Bill Act, signed into law in July 2025, permanently set the federal estate and gift tax exemption at 15 million dollars per individual, or 30 million dollars for a married couple, beginning in 2026, with no scheduled reduction. For estates below that level, charitable trusts are often chosen more for income planning and legacy goals than for estate tax avoidance. See estate planning services for how these strategies fit into a full Ohio plan.

Frequently Asked Questions

What is a charitable lead annuity trust?

A charitable lead annuity trust pays a qualified charity a fixed dollar amount every year for a set term. When the term ends, the remaining trust principal passes to the donor’s chosen noncharitable beneficiaries, often family members, potentially with reduced gift or estate tax cost on any growth in the trust’s assets.

Can you change the beneficiary of a charitable remainder trust?

Generally, no. A charitable remainder trust is irrevocable once funded, and the charitable beneficiary named in the trust document is typically fixed. Some trusts grant the donor a limited power to change which qualified charity receives the remainder, but that power must be written into the trust terms from the start.

Are contributions to a charitable trust tax deductible?

Contributions to a properly structured charitable remainder trust or charitable lead trust generally qualify for a partial income, gift, or estate tax deduction, based on the present value of the charity’s interest as calculated under IRS tables. The deductible amount depends on the trust’s payout rate, term, and the applicable federal interest rate.

Why use a charitable remainder trust instead of giving directly?

A charitable remainder trust lets a donor support a cause while still receiving an income stream from the donated assets, which an outright gift does not provide. It can also help spread out capital gains recognition on appreciated property sold inside the trust rather than triggering tax all at once outside it.

How do you dissolve a charitable remainder trust before its term ends?

Early termination of a charitable remainder trust is possible in limited situations, often through a negotiated buyout in which the income beneficiary and the charity agree to divide the trust’s value and end the trust early. Court approval and the involvement of the Ohio Attorney General’s Charitable Law Section are typically required.

Discuss your next step

The causes you care about deserve a place in a plan that also considers your family’s needs. Begin coordinating the giving strategy before making a substantial gift, so the legal and tax questions can be considered together. Schedule a complimentary 15-minute Strategy Session with Intake Services to share your priorities and explore whether Rhodium Law is the right fit to help.

Families who create or support a nonprofit should distinguish personal charitable planning from the organization’s separate Ohio charitable registration obligations.