A Utah charitable trust is an irrevocable trust that benefits one or more charitable organizations while providing tax benefits and often an income stream to the donor. The Utah Uniform Trust Code at Title 75 Chapter 7 governs charitable trusts, which include charitable remainder trusts, charitable lead trusts, and charitable annuity trusts, each with distinct income and tax characteristics under federal law.
Last updated: July 2026
Key Takeaways
- Charitable remainder trusts provide income to the donor for life with the remainder going to charity.
- Charitable lead trusts provide income to charity for a term with the remainder going to family.
- CRUTs offer variable income based on trust value, while CRATs offer fixed annuity payments.
- Donors receive an immediate charitable income tax deduction for the present value of the charity’s interest.
- Utah law does not impose a state income tax on charitable trusts, preserving the federal tax benefits.
Charitable trusts serve two purposes simultaneously: they benefit charitable organizations and they provide financial benefits to the donor or the donor’s family. The specific design determines who receives income, who receives the remainder, and when the tax benefits accrue. Utah residents who are charitably inclined can use these trusts to support causes they care about while reducing their income tax, capital gains tax, or estate tax burden.
The charitable deduction available to the donor is calculated based on the present value of the charity’s interest in the trust, using IRS tables and the applicable federal rate. The deduction is available in the year the trust is funded, subject to adjusted gross income limits. Unused deductions can be carried forward for up to five years. The exact deduction amount depends on the trust type, the payout rate, the trust term, and the applicable federal rate at the time of funding.
How does a charitable remainder unitrust work in Utah?
A charitable remainder unitrust, or CRUT, pays the beneficiary a variable income stream each year equal to a fixed percentage of the trust’s annual value, revalued each year. If the trust assets appreciate, the income payments increase. If the trust assets decline, the payments decrease. The unitrust structure provides a hedge against inflation and allows the trust to share in market growth.
The donor transfers appreciated assets, such as stock or real estate, to the CRUT. The trustee sells the assets tax-free within the trust, reinvests the proceeds, and pays the donor or another income beneficiary the unitrust amount each year. At the end of the trust term, typically the donor’s death or a fixed term of years, the remaining trust assets pass to the designated charity or charities.
How does a charitable remainder annuity trust work in Utah?
A charitable remainder annuity trust, or CRAT, pays the beneficiary a fixed dollar amount each year. The annuity payment is set when the trust is created and does not change based on the trust’s investment performance. The annuity amount must be at least 5 percent of the initial trust value and cannot exceed 50 percent of the initial trust value. The CRAT provides income certainty for beneficiaries who prefer predictable payments.
Because the annuity is fixed, the CRAT cannot accept additional contributions after it is established. If the trust assets decline in value, the trustee must still pay the fixed annuity, which may require dipping into principal. If the trust assets perform well, the excess remains in the trust and passes to charity. The CRAT is simpler to administer than the CRUT because annual revaluation is not required.
How does a charitable lead trust work in Utah?
A charitable lead trust, or CLT, reverses the payment structure of a remainder trust. Instead of paying income to the donor and giving the remainder to charity, a CLT pays income to charity for a fixed term and then distributes the remainder to the donor’s family. The CLT is primarily used for estate and gift tax planning rather than income tax planning.
There are two types of charitable lead trusts. A charitable lead annuity trust, or CLAT, pays a fixed annuity to charity. A charitable lead unitrust, or CLUT, pays a variable percentage to charity. In both cases, the donor receives a gift tax deduction for the present value of the charity’s interest, and the remainder passes to the donor’s family with reduced or zero gift tax. The CLT is particularly effective when interest rates are low because the charity’s interest has a lower present value, increasing the taxable gift to family.
Charitable remainder trusts allow Utah donors to sell appreciated assets tax-free within the trust, receive ongoing income, and claim a charitable income tax deduction.
What are the tax benefits of charitable trusts in Utah?
Charitable trusts offer multiple tax benefits. The donor receives an immediate charitable income tax deduction in the year the trust is funded. The trust is exempt from federal income tax, allowing assets to be sold without incurring capital gains tax. The trust assets are removed from the donor’s taxable estate for federal estate tax purposes, potentially saving significant estate tax for larger estates.
Utah does not impose a state income tax on charitable trusts that qualify under federal law. The state follows federal tax treatment of charitable trusts, meaning the income tax deduction and capital gains exemption recognized by the IRS are also recognized by Utah. This makes Utah a favorable jurisdiction for charitable trust planning, as the state tax treatment aligns with the federal treatment.
What charities can benefit from a Utah charitable trust?
Qualified charities under Internal Revenue Code Section 170 include public charities, private foundations operating exclusively for charitable purposes, churches, schools, hospitals, and governmental units. The donor can name one or multiple charities as beneficiaries. The charity must be a qualified organization at the time the trust is funded.
Many Utah donors use charitable trusts to support local organizations such as the University of Utah, Brigham Young University, Utah nonprofits, hospitals, religious organizations, or community foundations. A donor-advised fund can also be named as the charitable beneficiary, giving the donor the flexibility to recommend grants to multiple charities over time while taking the deduction in the year the trust is funded.
| Trust Type | Income to | Remainder to | Best for |
|---|---|---|---|
| CRUT (Variable) | Donor for life | Charity | Inflation hedge, appreciation |
| CRAT (Fixed) | Donor for life | Charity | Predictable income |
| CLAT (Fixed) | Charity for term | Donor’s family | Gift tax planning |
| CLUT (Variable) | Charity for term | Donor’s family | Growth for family |
Frequently Asked Questions
Can a charitable trust be revocable in Utah?
To qualify for charitable income tax and estate tax benefits, a charitable trust must be irrevocable. If the trust is revocable, the donor has not made a completed gift and is not entitled to a deduction.
What assets are best suited for funding a charitable trust in Utah?
Appreciated assets with low tax basis, such as stocks, real estate, and business interests, are ideal because the trust can sell them without paying capital gains tax.
Can I be the trustee of my charitable trust in Utah?
Yes. The donor can serve as trustee of a charitable trust. However, the trustee must administer the trust impartially between the income beneficiary and the charitable remainder beneficiary.
What happens if the charity ceases to exist before the trust terminates?
The trust should name alternate charitable beneficiaries. If no alternate is named, the Utah probate court may select a similar charity under the cy pres doctrine.
Can a charitable trust be modified after creation in Utah?
Modification is limited because the trust is irrevocable. The trust can be modified with court approval under Section 75-7-602 if circumstances have materially changed and the modification furthers the trust’s charitable purposes.
Does Utah have a charitable trust registration requirement?
Utah requires charitable organizations that solicit donations to register with the Utah Division of Consumer Protection. A charitable trust itself may have filing requirements depending on its structure.
How long can a charitable trust last in Utah?
Charitable trusts are not subject to the rule against perpetuities under Utah law. A charitable trust can last indefinitely as long as it serves its charitable purpose.
Can a charitable trust benefit a private foundation in Utah?
Yes. A charitable trust can name a private foundation as the charitable beneficiary. However, private foundations are subject to additional excise tax rules that may affect the trust’s structure.
Is a charitable trust right for your Utah estate plan?
A charitable trust is appropriate for Utah residents who have significant appreciated assets, want ongoing income, and intend to support charitable causes. The trusts are most effective for donors in higher income tax brackets who can benefit from the charitable deduction and donors with taxable estates who want to reduce estate tax exposure.
Charitable trusts are complex legal and financial arrangements that require coordination between the donor’s estate planning attorney, tax advisor, and financial advisor. A Utah attorney experienced in charitable planning can structure the trust to achieve the donor’s charitable goals while maximizing the tax benefits under both Utah and federal law.
Planning your estate in Utah? Jeremy D. Eveland, MBA, JD, can help you create a comprehensive estate plan that protects your legacy and your loved ones.
Call (801) 613-1472 or visit jeremyeveland.com to schedule a consultation today.
This article is for informational purposes only and does not constitute legal advice. Consult with a qualified Utah estate planning attorney for advice specific to your situation.
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