Law Offices of Alice A. Salvo
Start Your Solution. Schedule a Free Consultation Today.

Estates with charitable trusts must satisfy IRS rules

The IRS maintains specific definitions concerning what constitutes a valid trust that can be included in a Californian estate. Although many people want to donate assets to charitable causes, the estate devices they employ to do so don't necessarily benefit from the same tax protections a charitable organization might. For instance, charitable trusts that fail to satisfy the exclusion requirements demanded of public charities are usually deemed tax liable.

The taxes applied to charitable trusts depend on both their investment incomes and the dates of their founding. If someone creates a revocable trust while still living, and it changes to an irrevocable structure after they die, said trust will not be deemed charitable until a settlement period has passed. The IRS applies the same rule to trusts that were created by wills to disburse assets to charitable beneficiaries.

Trust contributors may need to pay regular federal excise tax on money they want to add to their charitable trusts. They can still seek deductions, but these have to be approved by the IRS. Because the agency can treat trusts as private foundations starting from a range of dates, such as when the trusts were created or when their grantors died, tax obligations may vary based on other circumstances.

Trust structures serve as a common means of giving money to charity, but they are not immune from legal requirements. Arranging a trust in a certain fashion may have a huge impact on what percentage of the assets it contains actually makes its way to the intended recipient. Before creating a trust explicitly or through a will, grantors may wish to speak with an attorney.

Source:, "Charitable Trusts", November 11, 2014

No Comments

Leave a comment
Comment Information
Email Us For a Response

Contact Us

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Office Location:

Law Offices of Alice A. Salvo
20350 Ventura Boulevard
Suite 110
Woodland Hills, CA 91364

Phone: 818-676-9572
Fax: 818-716-9275
Map & Directions

  • Super Lawyers
  • Peer Review Rated