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The causes you believe in, and your family. With a split-interest charitable trust, you can provide financial support for both—during your lifetime and beyond. And it can be an especially effective wealth management tool. These trusts allow you to transfer assets for your and your family’s benefit with fewer tax consequences. And give back to the causes that matter the most to you, in an amount and a way you choose. Show us your charitable vision. We’ll help you and your attorney identify the assets to earmark and create a split-interest charitable trust that works with your wealth goals.
A split-interest charitable trust is a straightforward, smart and tax-efficient way to support causes you care about—and preserve wealth for yourself and your family over the long term.
Choosing the type that’s right for you
There are two kinds of split-interest charitable trusts:
- Charitable lead trusts (CLTs)
- Charitable remainder trusts (CRTs)
Our philanthropy specialists and wealth advisors can work closely with you and your attorney to select the structure that fits both your short-term needs and long-term giving plan. If trusts are your choice, J.P. Morgan is also available to serve as trustee and administer distributions.
Charitable lead trusts: give to a cause, then leave the rest to your family
Over your lifetime, or the course of a set number of years, a charitable lead trust pays a set amount to one or more nonprofits of your choice. Once the term is up, the remainder of the assets transfer to your beneficiaries.
With a charitable lead trust, you may or may not have to pay a wealth transfer tax up front. When the remaining assets pass, there should be no additional tax responsibility, regardless of the amount being transferred.
Our philanthropy specialists and wealth advisors can help you create a custom plan that balances your wealth preservation and philanthropic goals. We can help you select:
- Which nonprofits you’d like to support with your gift.
- The amount you want to distribute annually.
- Whether you want distributions to continue for your lifetime, or for a set number of years.
- Whether your beneficiaries receive the remaining assets outright after the charitable term expires, or whether those assets are held in further trust for their benefit.
Charitable remainder trusts: give to family, then leave the rest to charity
A charitable remainder trust (CRT) is basically the inverse of a CLT. With a CRT, the payment stream typically returns to the grantor, and the remainder goes to charity.
How a CRT works:
- When you create a CRT, you receive a charitable income tax deduction based on the present value of the amount that would pass to charity when the payments to (typically) the grantor would end.
- Your trustee (J.P. Morgan) is then free to sell the assets of the trust. There is no capital gains tax due on sale. The proceeds can be reinvested in a diversified portfolio.
- You or your spouse (in the typical CRT) receive a payment stream from the trust portfolio, either for life or a set period of time you determine.
- Taxes are due only on the amount distributed to the recipient of the payment stream.
- When the term expires, the remaining assets in the trust go to a qualified charitable organization of your choice.
How the two types of charitable trusts work
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Private foundation services
To be successful, private foundations, like any business, need smart business strategies. We can help you identify and implement the nonprofit sector‘s leading best practices.
Making an impact starts with choosing the right structure for your philanthropic giving. A DAF can be a good alternative to setting up a private foundation.
This tax-efficient wealth management tool is a smart way to support the causes you believe in and provide for your family members—during your lifetime and beyond.