A charitable trust offers a way to leave money to a good cause without the funds being taxable. Any assets put into the trust are considered a gift to charity. The total value of the donation can be taken off of federal income taxes over a period of 5 years. The person creating the charitable trust (the grantor) may choose to receive income from the trust while he or she is still living. This can be calculated as a percentage of the trust assets or as a flat dollar amount per year. If income is received from the trust, the tax deduction is reduced by the amount of this income.

This type of trust is irrevocable. The grantor relinquishes all control over the assets and cannot change the terms of the trust deed. The charity acts as the trustee. When the grantor dies (or after the period of time specified in the deed), everything in the trust becomes the sole property of the charitable organization that controls the trust. The money and other property in a charitable trust is usually not subject to estate taxes.