Do you want to help make the world a better place? A charitable trust could be how you do that. It is one of the best ways to support a charity, because it also provides you with financial benefits. The IRS offers attractive tax benefits for creating a charitable trust if you support an IRS-approved charity.
What Are Charitable Trusts?
A charitable trust is a legal entity wholly separate from you created to hold and manage assets (like cash, securities, real estate) for distribution to a charity. It is like any other legally recognized entity. It owns any assets it holds (you transfer legal ownership of the assets to the trust) and pays taxes, but you establish how it will invest and make donations. Once you put the assets in, you cannot take them out, because charitable trusts are irrevocable trusts.
While you can put any asset into a charitable trust, most sell off things like real estate to make their transactions entirely in cash. The trust distributes its proceeds over time and can even continue to do so after your death. It enables you to set up ongoing gifts to causes you care about over however many years you wish.
There are two kinds: a charitable remainder trust and a charitable lead trust. A charitable remainder trust distributes assets to named beneficiaries first, then distributes what remains to charity. A charitable lead trust does it the other way around.
Benefits of Charitable Trusts
Charitable trusts are fantastic for tax management and estate planning. For instance, you can receive several tax benefits when you put your assets into a charitable trust, including a tax deduction for the value of the trust’s contributions and reduced estate taxes. And since you can use the trust to create a running series of instructions and gifts, it is a valuable tool for estate planning and long-term financial distributions. Furthermore, it can preserve the value of highly appreciated assets.
Plus, there is the philanthropic aspect of a charitable trust. It feels great to know you are using your wealth to do good during your lifetime, perhaps even well after.
Setting Up a Charitable Trust
To set up a charitable trust, you will need to consult an estate planning attorney like Robert Turner at Turner Law. Our law office can handle your charitable giving and create trusts as part of our estate planning services. Call (866) 768-5365 or fill out the contact form to schedule a free initial phone consultation to discuss your available options.
Posted on behalf of Turner Law, LLC