Charitable trusts can give RIAs another way to help clients manage appreciated assets, create income, and support charitable goals. They can be especially useful when a client owns highly appreciated stock, a business interest, real estate, or another asset that would create a large tax bill if sold outright.

Two common structures are charitable remainder trusts and charitable lead trusts. They work in opposite ways. A charitable remainder trust pays income to the client or another beneficiary first, with the remaining assets going to charity. A charitable lead trust makes payments to charity first, with the remaining assets potentially passing to family.

RIAs do not draft these trusts. Their role is to model the investment, tax, and cash-flow impact and coordinate with the client’s estate attorney and CPA before the transfer is made.

How Should RIAs Use Charitable Remainder Trusts?

A charitable remainder trust can pay income to a beneficiary for life or for a term of up to 20 years. After that period, the remaining assets go to charity.

There are two main types. A CRAT pays a fixed annual amount, while a CRUT pays a percentage of the trust’s value, which is recalculated each year.

CRTs can be useful when a client wants to sell an appreciated asset but does not want to recognize the full gain immediately. The trust is generally exempt from income tax, so it can sell appreciated stock without creating an immediate capital-gain tax for the donor. Instead, the gain is generally recognized over time as the beneficiary receives distributions under the applicable tax rules.

When Should RIAs Consider Charitable Lead Trusts?

A charitable lead trust works in the opposite direction. Charity receives payments during the trust term, and family members may receive the remaining assets when the term ends.

This structure can be useful for clients who already have a strong charitable giving plan and also want to transfer future growth to family members.

Grantor and non-grantor lead trusts have different tax consequences. The right structure depends on the client’s income, estate plan, charitable goals, and expected trust returns.

Lead trusts require careful planning and administration, so the RIA should work closely with estate counsel and the CPA before recommending the structure.

How Should RIAs Coordinate Charitable Trusts With Estate Planning?

Charitable trusts work best when the RIA, attorney, and CPA have clearly defined roles.

The attorney handles the trust documents, legal structure, and transfer requirements. The CPA manages tax reporting, deductions, distribution reporting, and estimated taxes. The RIA manages the investment strategy and models the client’s cash flow.

The team should also review the charitable beneficiary, trustee, valuation, and funding timeline before the transfer is completed.

What Other Areas Can Help RIAs Deliver More Client Value?

Charitable trusts are only one part of managing complex client assets. The same clients may also hold securities that qualify for class action settlements and other recovery programs.

Securities class action settlements totaled approximately $8 billion in 2025, creating a significant pool of potential recovery for investors.

Platforms such as 11th.com automate the process of monitoring settlements, matching holdings, filing claims, and payout delivery. For RIAs, recovery alpha provides another way to deliver value from securities clients already own while reducing the administrative work involved in managing claims.

What Will Charitable Trust Planning Look Like in 2026 and Beyond?

In 2026 and beyond, charitable trusts will remain one option for clients who want to combine charitable giving with income or estate planning.

For RIAs, the key is to treat the trust as part of the client’s wider financial plan rather than as a standalone product. The asset, payout, tax impact, investment strategy, and charitable goal should all be reviewed before the transfer is made. 

FAQ

What is a charitable remainder trust?

A charitable remainder trust pays income to a beneficiary for life or a set period and then gives the remaining assets to charity.

How is a charitable lead trust different?

A charitable lead trust makes payments to charity first. Family members may receive the assets that remain when the trust term ends.

Can a CRT sell appreciated stock without immediate capital-gain tax?

Generally, yes. The trust is generally exempt from income tax on the sale, while the beneficiary recognizes the gain over time as distributions are received.

Who should draft a charitable trust?

An estate attorney should draft the trust. The RIA can model the investment and cash-flow impact, while the CPA handles the related tax work.

Can a donor-advised fund be used with a charitable trust?

In some cases, a donor-advised fund can serve as the charitable beneficiary, giving the family more flexibility over future charitable grants.