A Trustee of a Charitable Trust requires special expertise due to the unique nature of how income is taxed to the income beneficiary.  There are also special fiduciary rules related to income and the charitable remainder beneficiaries. In addition, the trustee must ensure the charitable trust does not earn any unrelated business income in any calendar year.

The trustee determines the goals, objectives and investment management strategies of the trust depending on the type of charitable trust it is:

  • Annuity: Unitrust
  • Flip
  • Income Only
  • Income with Make-up Provision

Not every asset is appropriate for a charitable trust; therefore, the trustee must review the asset to see if the trust can accept it. The charitable deductions need to be calculated for income tax purposes for the grantor.

The accounting for charitable trusts is unique since there are four different types of income a trust can generate. The trust needs to be evaluated annually to determine the pay out amount to the income beneficiaries.

Last, but not least, upon the death of the income beneficiary, the trust is terminated and the assets are distributed to the charitable institutions.