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Ohio Charitable Trusts Lawyer

Helping Columbus, Cincinnati, and Dayton clients use charitable remainder trusts, charitable lead trusts, and donor strategies to reduce taxes, generate income, and leave a meaningful legacy.

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Charitable Trusts in Ohio: How They Work and What They Cost

Charitable trusts are sophisticated estate planning vehicles that allow you to support causes you care about while simultaneously reducing federal income taxes, bypassing capital gains on appreciated assets, and removing value from your taxable estate. Ohio residents who own appreciated stock, real estate, or a closely held business interest are often ideal candidates for charitable trust planning. At Jwayyed Law LLC, we guide clients throughout Columbus, Cincinnati, Dayton, and the surrounding areas through every step of establishing a charitable trust that integrates seamlessly with their broader estate plan.

Ohio has no state estate tax — it was repealed effective January 1, 2013. However, for estates that exceed the federal exemption (currently $13.61 million per individual in 2024, though this amount is scheduled to sunset to approximately $7 million after 2025 absent congressional action), charitable trusts can play an important role in reducing federal estate tax exposure. Even for estates well below the federal threshold, charitable trusts offer compelling income tax advantages that can deliver real economic value in the year of funding.

The governing federal statutes for charitable remainder trusts are IRC 664 (which defines the income payout rules and tax treatment), IRC 170 (which provides the income tax deduction), and IRC 2055 and 2522 (which provide estate and gift tax deductions for charitable transfers). In Ohio, the Ohio Trust Code under ORC Chapter 5804 governs charitable purpose trusts, and the Ohio Attorney General has supervisory and enforcement authority over charitable trusts under ORC 109.23 through ORC 109.33, including mandatory registration and annual reporting obligations.

Charitable Remainder Trusts: CRAT vs. CRUT

A charitable remainder trust (CRT) is an irrevocable split-interest trust: you (or other named individuals) receive income for a term, and whatever remains at the end passes to charity. There are two main types. A Charitable Remainder Annuity Trust (CRAT) pays a fixed dollar amount each year — determined as a percentage of the initial contribution. Once set, the annuity amount never changes regardless of investment performance, making it predictable but inflexible. A Charitable Remainder Unitrust (CRUT) pays a fixed percentage (at least 5% per IRC 664) of the trust\'s fair market value as redetermined each year. If the trust grows, your payments grow with it. CRUTs allow additional contributions; CRATs do not.

The capital gains bypass benefit is one of the most compelling reasons Columbus-area clients use CRTs. If you own appreciated real estate or stock with a very low cost basis, selling it outright would trigger federal capital gains tax — up to 23.8% (20% long-term rate plus 3.8% net investment income tax). By contributing that property to a CRT instead, the trust sells it free of capital gains tax. The full sale proceeds remain in the trust and are invested to generate your income stream. You receive an immediate partial income tax deduction under IRC 170 in the year of the contribution. The capital gain is not eliminated — it is spread over your income distributions over time and characterized according to IRS four-tier accounting rules — but the immediate lump-sum tax hit is avoided.

When you fund a CRT, you must designate one or more qualified charities as remainder beneficiaries. This can be a public charity (a university, hospital, religious organization, or community foundation), a donor-advised fund, or a private foundation you establish. You cannot change the remainder beneficiary in a way that would disqualify the trust as a charitable remainder trust under IRC 664, so careful selection at the outset is critical.

Charitable Lead Trusts and Alternatives to CRTs

A Charitable Lead Trust (CLT) works in the reverse order of a CRT. The trust pays an annuity or unitrust amount to charity for a defined term, then the remaining principal passes to your heirs. A Charitable Lead Annuity Trust (CLAT) makes fixed annual payments to charity; a Charitable Lead Unitrust (CLUT) pays a percentage of annually revalued assets. CLTs are powerful wealth transfer tools in low-interest-rate environments. Because the IRS values the remainder interest to heirs using the Section 7520 rate, a low AFR means the IRS assigns a low value to what passes to heirs — reducing or eliminating the taxable gift.

Donor-advised funds (DAFs) are a simpler, lower-cost alternative for clients who want to make a charitable contribution and take an immediate deduction but do not yet know which charities they want to benefit. You contribute assets to a sponsoring organization (such as a community foundation or a financial institution\'s charitable arm), receive an immediate deduction, and then recommend grants to qualified charities over time. DAFs do not provide the income stream of a CRT, but they are inexpensive to establish (often no cost) and offer maximum flexibility. A private foundation is another option for donors seeking more control, though foundations carry higher administrative costs and more stringent IRS compliance requirements under IRC 4940 through 4958.

Choosing among a CRT, CLT, donor-advised fund, or private foundation depends on your income needs, estate size, philanthropic goals, and the type of assets you plan to contribute. Our Columbus estate planning attorneys work with your financial advisor and CPA to model the after-tax outcomes of each option before recommending a structure.

Ohio Attorney General Oversight and Ongoing Compliance

Ohio takes charitable trust oversight seriously. Under ORC 109.23 through ORC 109.33, any trustee holding assets for charitable purposes must register with the Ohio Attorney General\'s Charitable Law Section and file annual financial reports. Failure to register or report can result in enforcement action. The AG has authority to audit charitable trusts, compel accountings in probate court, seek court-ordered modifications or terminations of trusts that have become impractical, and bring actions against trustees who breach their fiduciary duties. These ongoing obligations are separate from the federal requirement to file IRS Form 5227 (Split-Interest Trust Information Return) annually for CRTs and CLTs.

When we draft a charitable trust for an Ohio client, we prepare the registration materials and initial annual report filing as part of the engagement, and we advise on the ongoing recordkeeping practices that will keep the trust in good standing with both the Ohio AG and the IRS. Properly structured and maintained, a charitable trust can serve as the centerpiece of a philanthropic legacy that benefits your family, your community, and the causes you have supported throughout your lifetime.

Charitable Trusts – Locations We Serve

We serve clients in the following Ohio counties. Each county has its own page; click through for court information and local details.

Franklin CountyColumbus & surrounding areasDelaware CountyDelaware & surrounding areasButler CountyHamilton, Oxford, West ChesterGreene CountyFairborn & surrounding areasMontgomery CountyDayton & surrounding areasPickaway CountyCircleville & surrounding areasAthens CountyAthens & surrounding areasMorrow CountyMount Gilead, Cardington & surrounding areasClinton CountyWilmington & surrounding areas
All Trust ServicesIrrevocable TrustsEstate Planning & WillsDynasty Trusts

Frequently Asked Questions

A charitable remainder trust (CRT) is an irrevocable trust into which you transfer appreciated assets. You or your named beneficiaries receive an income stream — either a fixed annuity (CRAT) or a percentage of annually revalued trust assets (CRUT) — for a term of years or for life. At the end of the trust term, whatever remains in the trust passes to one or more qualified charities. You receive an immediate partial income tax deduction under IRC 170 in the year of the contribution, calculated based on the present value of the charity's expected remainder interest.
In a CRT, you (the donor) receive the income stream first, and the charity receives the remainder at the end. In a CLT, the charity receives the income stream first for a term of years, and your heirs receive the remainder at the end. CLTs are used primarily to reduce gift or estate taxes on transfers to heirs, while CRTs are primarily used to generate income for the donor and bypass capital gains on appreciated assets. Which is better depends on your wealth transfer objectives, income needs, and philanthropic priorities.
When you fund a CRT, you are entitled to a charitable income tax deduction under IRC 170 equal to the present value of the charity's remainder interest, calculated using IRS tables and the applicable federal rate (AFR). For a $1 million CRT with a 5% annuity payout over 20 years, the deduction might be $300,000–$500,000 depending on current interest rates. Additionally, the trust itself does not pay capital gains tax when it sells appreciated property — that gain is spread over your income payments as they are received, instead of being recognized all at once.
Under IRC 664(d)(1)(A) for CRATs and IRC 664(d)(2)(A) for CRUTs, the annual payout rate must be at least 5% of the initial net fair market value of the trust assets (for a CRAT) or 5% of the trust's annually revalued assets (for a CRUT). The payout rate cannot exceed 50%, and for a CRAT the IRS must determine that there is at least a 10% probability that the charitable remainder will equal at least 10% of the initial contribution.
You may serve as your own trustee of a CRT or CLT in Ohio, though many donors prefer to name an independent corporate trustee or a community foundation to handle investments and distributions. The trustee has fiduciary duties under ORC Chapter 5808, including duties of prudent investment and impartiality between the income beneficiary (you) and the remainder beneficiary (the charity). For CLTs structured to qualify for the gift tax charitable deduction, an independent trustee is generally advisable.
A CLT makes sense when your primary goal is transferring wealth to children or grandchildren at a reduced gift or estate tax cost, rather than generating income for yourself. CLTs work especially well in low-interest-rate environments because the IRS discount rate (Section 7520 rate) used to value the charity's interest is lower, which increases the present value of what passes tax-free to your heirs. They are also useful when you have already met your income needs and want to benefit both a charity and the next generation simultaneously.
The Ohio Attorney General has broad supervisory authority over charitable trusts under ORC 109.23 through ORC 109.33. Trustees of charitable trusts must register with the AG's Charitable Law Section and file annual financial reports (Form CT-12F or equivalent). The AG may investigate misuse of charitable assets, compel accountings, seek removal of trustees, and bring legal actions to enforce the charitable purposes. Ohio's Uniform Trust Code (ORC Chapter 5804) also governs charitable purpose trusts and requires that they be enforced exclusively for their stated charitable purposes.
Attorney fees to draft a CRT or CLT in Ohio generally range from $2,500 to $6,000 depending on complexity, the number of income beneficiaries, the type of charitable vehicle chosen, and whether a private foundation or donor-advised fund is also being established. There are also ongoing trustee fees if a corporate trustee manages the trust, annual tax preparation costs (Form 5227 must be filed with the IRS), and the requirement to register with and annually report to the Ohio Attorney General's office.

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(614) 285-5482jwayyedlawllc@outlook.com
100 E. Campus View Boulevard, Suite #250, Columbus, Ohio 43235

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