Charitable Trusts

VIDEO TRANSCRIPTION

If you have a heart, and a mind, for philanthropy, why not consider a charitable trust? You’ll get tax and other benefits and do something good for the world at the same time. Before you get started.  Remember 2 important things:

  1. Your charity must be IRS qualified.
  2. Charitable trusts are irrevocable, which means almost impossible to change.

Now, let’s look at the two main types of charitable trusts to consider when developing your estate plan. One is the charitable lead trust the other is the charitable *remainder trust. While similar, they serve two different purposes. When assets are distributed from a charitable lead trust, the first to benefit is the chosen charity. You get a tax deduction equal to the payment. The remainder of the trust is distributed to your beneficiaries. Then there is the charitable remainder trust.

In this scenario, you make the trust the beneficiary of your IRA then you chose a family member to receive annual payments for a period of time. Once that time is up, the family member’s interest in the trust ends, and the rest goes to your charity.

So why use a charitable remainder trust?  Because the trust itself is like a charity, it’s tax -exempt.  So when you pass away, the funds that go into the charitable remainder trust are not taxable.  Although the family member who received the payments must claim that as income. Whichever charitable trust you chose, the result will be lowered estate value and fewer taxes as well as probate avoidance which are all good things. But it can be complicated process, so be sure you work with an experienced accredited estate planning attorney.