There are a number of legal vehicles that you can use to better position your estate for distribution upon your passing. One effective way to save money on taxes and increase an estate’s income is to create a charitable trust. This type of trust isn’t tax exempt and is meant to benefit one or more charities. However, the assets in a charitable trust can be subjected to a charitable contribution deduction, which can significantly decrease the size of a taxable estate.
So how does a charitable trust work? In many instances an asset like real estate is placed into the trust and income is paid to the trust creator over a period of years. Once that period of time expires, then the asset is distributed to the charity named in the trust, or it remains in the trust for the charity’s benefit without additional payment.
Utilizing a charitable trust, in one of its many forms, can be a great way to preserve your legacy, do some good, and benefit your estate all at the same time. While many charitable trusts contain a single asset, they can be created in a way that allow additions to the trust. As mentioned above, one of the biggest benefits of a charitable trust is reducing taxes. This can save your estate a significant amount of money that can be enjoyed by your heirs and beneficiaries.
As enticing as charitable trusts sound, they may not be right for you. It really just depends on the specific circumstances surrounding your assets, your heirs and beneficiaries and what you want out of estate planning. However, even if you aren’t interested in a charitable trust, this just illustrates how customized the estate planning process can be. Therefore, don’t hold off on creating or modifying your estate plan. Instead, feel confident in your ability to shape the future of your estate. We stand ready to help with the process.
