What are charitable trusts?

Charitable trusts are an estate planning option that can provide valuable support for charities while still enabling a trust’s creator to support their loved ones. As part of a comprehensive estate plan, these trusts are established to manage assets for charity, offering a structured way to give back. There are two types of charitable trusts, charitable lead trusts (CLT) and charitable remainder trusts (CRT). Charitable lead trusts (CLTs) CLTs can provide a charity with income for a set period before what’s left goes to the creator’s beneficiaries. This setup is particularly attractive for those looking to make a lasting impact on a charity while still preserving assets for their family. It offers tax advantages, such as reduced estate and gift taxes, making it a strategic choice for estate planning. Charitable remainder trusts (CRTs) CRTs pay a set amount to beneficiaries before paying what’s left over to the charity. This arrangement can provide a steady income stream and significant tax benefits, including immediate income tax deductions and potential capital gains tax avoidance. Benefits of charitable trusts There are two main benefits to charitable trusts. They enable the creator to offer valuable support to charities in exchange for protecting the estate’s overall value by providing very specific tax benefits. Charitable trusts also give donors a degree of flexibility in terms of how the charity uses their gift. As part of the trust, creators can specify certain conditions or purposes for the funds. This ensures that the donor’s philanthropic goals are met in a manner that aligns with their personal values and legacy aspirations. Ultimately, charitable trusts are only one part of a comprehensive estate plan. Anyone who’s trying to get their affairs in order should work to determine the options they have and how each will impact them now and their beneficiaries in the future. Working with a legal representative who can explain these concerns and help to get everything set up appropriately can be valuable in this regard.The post What are charitable trusts? first appeared on Scott + Hespen Law, PLLC.