Setting up an estate plan isn’t always an easy undertaking, but it’s one that’s very important for all adults. You have to consider several points and options as you’re setting up the plan. One of consideration that should be made is whether charitable giving will be part of your legacy.
If you decide that you want to support a charity as part of your estate plan, you may opt to include a charitable trust. Once you make that decision, you have to determine what type of charitable trust to use.
Types of charitable trusts
In a charitable remainder trust, the beneficiaries of the trust receive income from it for a specified period. Once that period is over, the remaining assets in the trust will be transferred to the chosen charity.
A charitable lead trust is the opposite. The trust receives the income from the trust for a specified period. Once that’s over, the beneficiaries receive the remainder of the assets.
Advantages of charitable trusts
The primary advantage of charitable trusts is that you get to support your chosen cause after your death. Some tax advantages can also occur with these trusts. One of these is that the assets in the trust are removed from your taxable estate, which can reduce estate tax liability.
Crafting an estate plan requires you to think about how you’re going to support chosen entities and people after your death. Discussing your wishes with someone familiar with these matters may be beneficial since they can assist you with determining the options you have for each asset.
