Overview

Choosing between a charitable bequest and a trust gift affects how much control you keep, when the charity receives assets, and what tax benefits your estate or heirs may get. Both can be effective ways to support charities, but they serve different financial and personal goals. In my practice, clients use bequests for simplicity and trusts when they want income, tax planning, or conditional gifting.

How each vehicle works

  • Charitable bequest: You add language to your will naming a charity and specifying a gift — a dollar amount, percentage of the estate, or a residual gift (what remains after other distributions). The gift is effective only after your estate goes through probate and is administered. Bequests are simple to implement and flexible to change by revising your will.

  • Trust gift: You transfer assets into a trust document created during your lifetime (revocable) or that cannot be changed (irrevocable). A charitable trust can be structured many ways: charitable remainder trusts (CRT), charitable lead trusts (CLT), or donor-advised funds funded via trust assets. Trusts can provide lifetime income to you or beneficiaries, immediate tax deductions in certain cases, or scheduled payments to charities.

Timing, control, and flexibility

  • Timing: Bequests pay after death via the estate; trusts can pay charities during your life, after death, or on a schedule you set.
  • Control: A trust lets you set conditions (ages, milestones, income streams) and appoint a trustee to manage assets. Bequests rely on the executor and are generally simpler.
  • Flexibility: A revocable living trust can be amended while you live. Irrevocable trusts offer stronger tax benefits but limit later changes.

Common types and typical uses

  • Simple bequest (will): Good for modest estates or people who prefer a low-cost approach. Useful when you want to leave a specific dollar amount or percentage.
  • Residual bequest: Directs the remainder of the estate to charity after other distributions.
  • Charitable remainder trust (CRT): Pays income to non-charitable beneficiaries (often the grantor or spouse) for a term, then transfers the remainder to charity. Often used to convert highly appreciated assets into lifetime income and delay or reduce capital gains taxes (see IRS — Charitable Remainder Trusts).
  • Charitable lead trust (CLT): Sends income to charity now and returns the remainder to family or other beneficiaries, often used for multigenerational wealth transfer.
  • Donor-advised fund (DAF): Not a trust, but a common tool. You make an irrevocable gift, get an immediate charitable deduction, and recommend grants over time.

Tax implications (high-level)

  • Bequests: Gifts to qualified charities made by will are treated as charitable deductions on an estate tax return (Form 706) if the estate files one; they do not generate an individual income tax deduction for the deceased. For details on what counts as a qualified charity and reporting, see the IRS guidance on charitable organizations (https://www.irs.gov/charities-non-profits).

  • Trusts: Certain charitable trusts (like CRTs) can provide an immediate charitable income tax/estate tax benefit depending on the structure and whether assets are transferred during life. Irrevocable charitable trusts can reduce the size of a taxable estate, which helps when estates approach the federal exclusion threshold. Rules are complex; consult IRS pages on charitable trusts and a tax professional before acting (https://www.irs.gov/charities-non-profits/charitable-remainder-trusts).

Note: Federal and state tax rules change. Exact tax outcomes depend on the trust type, asset type, estate size, and current law. For general estate planning basics, see the Consumer Financial Protection Bureau’s resource on wills and trusts (https://www.consumerfinance.gov/consumer-tools/estate-planning/).

Pros and cons at a glance

Legacy Vehicle Pros Cons
Charitable bequest (will) Simple to add or change; low upfront cost; available to most estates Charity only receives gift after probate; limited tax planning benefits for the living donor
Charitable remainder trust (CRT) Can generate lifetime income; may defer capital gains on appreciated assets; potential estate tax benefits More complex; setup and trustee costs; irrevocable transfers limit flexibility
Charitable lead trust (CLT) Supports charity immediately while passing future remainder to heirs with possible tax advantages Complex; better suited to larger estates or multi-generation planning

Practical decision framework

  1. Identify goals: Are you prioritizing immediate income, lifetime support for a charity, estate tax reduction, or simplicity?
  2. Inventory assets: Appreciated stock, business interests, real estate, or cash favor different vehicles. CRTs often make sense for appreciated securities; bequests are straightforward for cash or modest estates.
  3. Consider beneficiaries: If you want to provide income to a spouse or yourself, a trust can help. If your primary goal is post-death charity support without altering family distributions now, a bequest may suffice.
  4. Cost and administration: Trusts involve legal drafting, trustee fees, and ongoing administration. Estimate costs and weigh them against tax or income benefits.
  5. Consult specialists: Work with an estate attorney and tax advisor to model outcomes and draft precise language.

In my practice, I often guide middle-income clients toward a bequest for its low cost and ease, while recommending charitable trusts to higher-net-worth clients seeking tax efficiency and lifetime income. Combining vehicles is common: a CRT for a large appreciated holding and a bequest for smaller legacy gifts.

Example scenarios

  • Moderate estate: Maria wants to leave $25,000 to her local food bank. A charitable bequest in her will is straightforward, inexpensive, and clear to the executor.
  • Appreciated stock: Eric owns low-basis stock worth $1 million. Transferring it to a CRT can provide Eric with an income stream, reduce capital gains upon sale by the trust, and ultimately leave the remainder to his chosen charity.
  • Family + charity: The Johnsons fund a CLT that pays a college scholarship foundation for 10 years; after that, remaining assets pass to their children with reduced transfer taxes.

Common mistakes to avoid

  • Leaving vague language in wills or trusts. Always name the legal entity of the charity and include tax ID (EIN) if possible.
  • Forgetting contingent instructions. If the named charity no longer exists, provide backup recipients or directions.
  • Assuming tax savings without modeling. Trust benefits depend on law and your estate size — don’t assume a trust will always reduce taxes.
  • Neglecting beneficiary designations. Retirement accounts with beneficiary forms can bypass a will; coordinate these with estate documents (see our guide on how beneficiary designations interact with wills: How Beneficiary Designations Interact with Your Will).

Steps to take now

  1. Inventory assets and list charities you want to support.
  2. Meet an estate attorney to draft or update your will and discuss trust options.
  3. If considering a trust, run financial models with your tax advisor to compare outcomes.
  4. Keep records: Get charity EINs and letter of intent to help executors and trustees carry out your wishes.

FAQs

  • Who can receive a charitable bequest? Any qualified 501(c)(3) or other charity accepted under tax law; confirm the organization’s status via the IRS tax-exempt lookup.
  • Can I change a bequest after signing a will? Yes. Update your will or execute a codicil; if you have a revocable trust, modify it according to its terms.
  • Will a charitable bequest reduce my estate taxes? Potentially — gifts to qualifying charities can offset estate tax liability on Form 706 if your estate files one. Whether your estate pays federal estate tax depends on the exclusion amount and current law (see IRS estate tax guidance).

Sources and authority

Professional disclaimer

This article is educational and does not replace individualized legal, tax, or financial advice. Rules for trusts, charitable deductions, and estate taxes are complex and change over time. Consult an estate attorney and tax advisor before implementing charitable bequests or trust gifts.