When you think about your estate plan, you probably focus on transfers to the next generation, and this is understandable. But at the same time, your plan may extend in a broader direction to include charitable giving.
In affluent communities like Westport, Connecticut, philanthropy is often woven into both family life and financial planning. Many residents are in a position to make meaningful charitable gifts, and the right structure can make that generosity even more effective.
Charitable Lead Trusts
A charitable lead trust (CLT) allows you to provide immediate support to charitable organizations while still planning for your heirs.
With this type of trust, the charity receives payments from the trust for a set term. After that period ends, the remaining assets go to your chosen beneficiaries, often with reduced estate or gift taxes.
This structure works well if you want to see the impact of your giving during your lifetime. It is also beneficial if you have a large estate and want to reduce the taxable value of the amount ultimately passing to your family.
Charitable Remainder Trusts
A charitable remainder trust (CRT) works in the opposite way. It allows you or someone you name to receive income from the trust for life or for a set term. After that period, whatever remains in the trust goes to the charity or charities you have selected.
CRTs are useful if you have appreciated assets, like real estate or stocks, and want to convert them into income without paying immediate capital gains tax. You also receive a charitable income tax deduction when the trust is funded.
There are two main types of CRTs:
- Charitable Remainder Annuity Trust (CRAT): Pays a fixed dollar amount each year, regardless of trust performance.
- Charitable Remainder Unitrust (CRUT): Pays a set percentage of the trust’s value, recalculated annually.
Each has advantages depending on your financial goals and appetite for fluctuation in annual income. A CRT must comply with IRS requirements to maintain its tax benefits, which means proper legal and financial oversight is essential.
Donor-Advised Funds
If you want a simple, flexible way to support charitable causes over time, a donor-advised fund (DAF) may be a good fit.
A DAF is a giving account you set up through a public charity or financial institution that sponsors these funds. You contribute assets, receive an immediate income tax deduction, and then recommend grants to charities at your own pace.
In your estate plan, you can name your DAF as a beneficiary of life insurance, retirement accounts, or other non-probate assets. You can also appoint a successor advisor, often a child or other family member, who will continue making grant recommendations after you pass.
A DAF offers many of the benefits of a foundation with fewer costs and administrative requirements. It is a strong option if you want to support multiple organizations over time without forming a separate legal entity.
Family Foundations
A private family foundation gives you the highest level of control over your charitable giving.
With a foundation, you create a legal entity that can make grants to IRS-recognized nonprofits. You or your family members can serve on the board, set the mission, and decide which causes to support.
Many families in Westport who have a long history of philanthropy choose this route to institutionalize their values. A foundation also allows you to involve younger generations, helping to create a shared purpose around giving.
Attend a Live Learning Event!
We host seminars that cover all of the most important aspects of this important process. Our two locations are in Westport and Glastonbury, so the events are held in these areas. To see the dates and learn more, visit this page: estate planning seminar schedule. If you are ready to get started now, you can reach our office by calling (860) 548-1000 or by using the contact page on our website.
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- Do Trusts Pay Taxes on Capital Gains? - July 9, 2026
- How Does a Trust Differ From a Will? - July 7, 2026
Do Estate Taxes Apply to Transfers to My Spouse?
( By appointment only )