Charitable Protection Trust™ by Cutler | Riley

A branded estate-planning legal service for clients—especially business owners—who want disciplined annual charitable giving and protection from lawsuits.

What It Is

A simple way to give to charity, grow wealth tax-free inside a trust, and add protection

The Charitable Protection Trust (CPT) is an estate-planning strategy for families and business owners who want three things at once:

  • Predictable annual giving to qualified charities,

  • An extra layer of protection around family wealth, and

  • Tax-efficient growth on money tucked inside the trust.

Unlike CRTs or CLTs, this is not a split-interest charitable trust. It’s a planning framework and trust design delivered as an attorney legal-services engagement.

The Big Idea

  1. Move 49% of non-W-2 income into the CPT each year.
    Non-W-2 income includes K-1s, dividends, interest, and rental income. That 49% flows into the trust.

  2. Inside the trust, money is treated as passive and saved to principal.
    Trust receipts (and the trust’s half of any future capital gains on assets) are allocated to principal and grow tax-free inside the trust until distributed. The calculator models a default 5% annual growth on the principal balance.

  3. Annual charitable giving is built in.
    Each year the trust gives 1%–20% of its gross trust income to qualified charities (policy floor: 1%). That donation comes from the trust—so it’s fully deductible to the trust under IRC §642(c) when paid from gross income according to the governing instrument. (For comparison, individuals generally can deduct cash gifts up to 60% of AGI.)

  4. Cash taken out is taxable to the recipient.
    When the trustee distributes cash from the CPT to family, it’s modeled as taxable to the recipient. That keeps the plan conservative and aligns expectations.

  5. There’s an asset-protection benefit.
    The CPT adds governance and separation that can reduce exposure to future creditor claims and internal disputes, alongside the charitable purpose. (The underlying legal mechanics are reviewed in a confidential attorney consultation.)

Who typically uses a CPT?

  • Business and practice owners with pass-through income

  • Real-estate families with rental or investment income

  • Households that already donate regularly and want it automated

  • Families who like the idea of growing a protected, tax-deferred pool for future goals while still giving each year

  • Not every situation warrants a CPT. If the numbers don’t pencil out, other structures can still accomplish charitable giving and asset protection.

How The Money Flows

  • You earn $300,000 of non-W-2 income.
    49% ($147,000) goes to the CPT; 51% ($153,000) stays with the family.

  • Charitable giving:
    Suppose the trust’s giving rate is 10%. The CPT donates 10% of $147,000 ($14,700) to qualified charities. Because the gift is paid by the trust from gross income, it’s fully deductible to the trust (under §642(c)). Without the trust, the same 10% personal gift ($30,000) would be subject to the individual deduction limits (generally up to 60% of AGI for cash gifts).

  • Trust principal builds:
    After trust fees (modeled at $5,000/yr) and the donation, the remainder stays in the CPT’s principal and compounds tax-free in the model until distributed.

  • If an asset is sold later:
    The trust’s half of the capital gain is added to principal untaxed in the sale year (per the model). The individual’s half is taxed to the family at long-term capital-gain rates. The trust principal continues to compound for future goals.

  • Distributions:
    If the family needs cash from the trust this year, the trustee can distribute it. Any amount distributed is treated as taxable to the recipient.

Use the calculator below to see how the after-tax, after-charity totals compare with and without the CPT, year by year.

Benefits at a Glance

  • Disciplined generosity
    Automates giving at 1%–20% of trust gross income, so it always happens first.

  • Tax-efficient growth
    Trust receipts and trust-side gains are modeled to grow tax-free inside the trust until distributed.

  • Better deduction mechanics on the trust side
    Trust charitable gifts paid from gross income can be deducted under §642(c) without the 60% individual AGI cap. That can preserve more personal deduction room and simplify personal taxes in some cases.

  • Governance and protection
    The structure adds guardrails that can reduce exposure to future creditor claims and family disputes (reviewed privately with counsel).

  • Client-friendly cash control
    Need cash? The trustee can distribute it—just remember distributions are taxable.

What it Costs

$20,000 for design, drafting, and implementation guidance (scope defined at engagement).

What You’ll Receive

  • Charitable Protection Trust agreement tailored to your situation

  • Trustee guidance and onboarding

  • CPA coordination notes for annual reporting

  • Implementation checklist and timelines

  • Optional ongoing legal review to keep the plan aligned

(Investment management and custody are not provided by the law firm.)

FAQs

Is this the same as a Charitable Remainder Trust (CRT) or Charitable Lead Trust (CLT)?
No. The CPT is its own framework—annual giving plus protective trust governance—not a split-interest trust.

Who chooses the charities?
You do, within eligibility and governance guidelines set in the trust.

What if the calculator shows little or no advantage?
Purpose comes first. When the math doesn’t justify the CPT, other planning paths can still hard-wire giving and add protection without unnecessary cost.

Will I see technical tax elections here?
No. The online materials are principles-based; the detailed mechanics and elections are reviewed privately with your attorney and CPA.

How to Get Started

  1. Confidential consultation – Fit, goals, and numbers.

  2. Design & drafting – Your trust and companion guidance are prepared.

  3. Implementation – Trustee training and CPA coordination.

  4. Ongoing support (optional) – Periodic legal check-ins.

Why Utah Families and Business Owners Explore the CPT

Utah households with meaningful pass-through income often want a plan that:

  • Bakes in yearly donations (many already give to church or community causes),

  • Keeps family wealth organized and better insulated from future claims, and

  • Lets a portion of income grow inside a trust until cash is actually needed.

The CPT is designed to meet those goals in one cohesive plan.

Important Notes

  • This overview is educational. Real-world results depend on your income mix, distributions, the assets involved, state law, and IRS guidance.

  • The trust’s charitable-deduction rules require that gifts be paid from gross income and authorized by the governing instrument to qualify under §642(c).

  • Personal income-tax effects (e.g., itemizing vs. standard deduction, SALT limits, NIIT, carryforwards) are not modeled unless specifically requested.

Is the Charitable Protection Trust™ right for you?

This strategy combines purposeful giving with stronger asset protection, but it’s not a one-size-fits-all solution. A confidential consultation will help determine if the numbers and benefits make sense for your situation.

Schedule a Free Consultation to Learn More

Ready to see your numbers?

Use the Charitable Protection Trust Calculator below to model your situation in minutes—just enter your annual non-W-2 income, the cash you might need from the trust each year, your giving percentage, and any expected capital gains. After you run a scenario, schedule a short planning session to review results and outline next steps.

Run the Numbers and See the Benefit