Who Might Set Up a Charitable Trust?
Approaching the sunset years of life, many people take comfort in the legacy they will leave behind. For many people this will be their family–children and grandchildren–who they hope to provide for in their estate planning.
In those unfortunate cases where parents cannot trust their children with an inheritance, due to a gambling addiction, alcoholism, or other problem, charitable trusts serve as a substitute beneficiary.
For people without children of their own, or who otherwise wish to expand their legacy beyond their own family, charitable trusts serve as a way to promote causes and ideals they supported in life long after their passing.
In addition to doing good and memorializing your life, charitable trusts can provide you and your heirs with substantial tax advantages.
The Most Common Type of Charitable Trust and Its Benefits
The most common kind of trust is a charitable remainder trust (CRT). In a CRT, assets are transferred from a benefactor to a non-profit organization. Typically, these non-profits must be recognized by the IRS as tax-exempt organizations. When setting up a CRT, you can name yourself or family members as beneficiaries.
Assets placed into trust can come in the form of cash, stock holdings, or tangible property such as jewelry that can then be sold by the non-profit to fund the purchase of income-producing assets.
That assets be income-producing is essential. The non-profit manages the trust and distributes income to you or another beneficiary. During your life, you receive an income tax deduction on. After your death, the funds held in trust and any further income from them belong to the non-profit, and these funds are not taxed as part of your estate.
In this way, you can support a charity of your choice while maintaining an income stream for living expenses as you age.
Other Types of Charitable Trusts
There are a number of other charitable trust forms to consider when estate planning.
-Family foundations and donor-advised funds offer maximum charitable tax deductions
-Charitable lead trusts provide their income to a charity for a set period of time before being dissolved. The funds are then returned to the donor or to other named beneficiaries.
-A remainder interest in a residence transfers a property title to a non-profit. The donor can continue to live in and enjoy the property for life. This may be a good option for people who do not want to leave their homes or who are concerned about managing real estate properties as they age.
Gosselin Law: Your Partner in Charitable Trusts
Charitable trusts offer a variety of ways to be generous while minimizing tax liability. Gosselin Law can help you navigate your options and choose a giving plan that best benefits the community you built up over your lifetime.