What Is a Charitable Trust and Is It The Right Move for Your Will?

You may be in the process of planning your estate and what to put into your will and you have thought you would like to give something back to the community. You may have been contributing to charitable organizations for some time, or you might even have your own charitable organization set up. You can keep contributing to these groups even after you are gone, and this is by setting up a charitable trust. What is it and is it the right move for you?

What is a Charitable Trust?

A charitable trust is simply assets, usually in the form of money but they can include property as well, that you designate to be sent to a specific charitable foundation. These assets are held in trust and are managed and cared for by the charity they are meant for. The charity will manage these funds for a specified amount of time – one that you have decided upon, and all interest this trust accumulates over that time period will be given to the charity.

When the money is sent to the charity, you can decide on how much the beneficiary will receive each year. This can be either permanent or for a certain amount of years. The amount can change over the years due to the amount of interest the trust earns as well.

What Types of Trusts Are There?

There are two different types of trusts that you can use. The first one is called the remainder trust. In this trust, a certain amount of assets are signed over to a charitable organization of your choosing for however long you want to send them money. You can decide to send the charity money long after you have passed on, and this can be specified in your will as well. The charity will own the assets outright once the period of time you have decided on has expired.

Another type of trust is known as a lead trust. In this trust, the ownership of each property and asset is kept in the original owner's hands, and any interest generated by the assets can either be given to the charity or split between the owner and the charity of their choice. Once the period of time has passed that you have chosen to have this trust, the property and assets revert to your control, or to whomever you have designated in your will.

What Are the Benefits?

There are some benefits of setting up a charitable trust alongside your will. You can take advantage of some tax breaks that you might not get otherwise, including on your federal tax refund. There are some stocks and properties that you can't get tax refunds on using your normal tax forms and setting up a charitable trust gives you the means to get some tax relief. Make sure you choose a reputable lawyer like the professionals at Klotz Jean Law Office Of to help you set up your charitable trust.