Why Create A Charitable Trust?

It is not uncommon for people to want to use their property to leave the world a better place when they pass away. Some people simply want to leave behind a legacy of philanthropy, while others want to use the assets they will no longer need to do good in the world. A charitable trust is one way to achieve these goals. Regardless of your motivation, drafting a charitable trust not only helps others, but it has many benefits for you, as well.

Types of Charitable Trusts 

There are two types of charitable trusts you can create to donate to others. You can draft either a charitable lead trust or a charitable remainder trust. The main difference between these trusts is when the charity of your choice will receive the funding. If you create a charitable lead trust, the charity will receive money first. When the trust is terminated, anything remaining is distributed to the beneficiaries you have chosen. Charitable remainder trusts work opposite to this. Beneficiaries are first paid as a source of income with the remainder going to the charity when the trust is terminated.

You can also set up charitable trusts in two different ways. You can create the trust during your lifetime, known as inter-vivo, or you can draft your will in a manner that the trust goes into effect upon your death, known as testamentary.

Charitable Trusts and Tax Benefits 

There are a number of tax benefits associated with charitable trusts. The biggest benefit is that these legal documents are exempt from estate taxes and capital gains after you pass away. This can result in substantially lower estate taxes on the rest of your property, depending on how large the charitable trust is. Charitable remainder trusts may also provide a partial income tax deduction while charitable lead trusts also have immediate tax benefits.

Protect the Value of Appreciating Assets 

Due to the fact that charitable trusts are exempt from taxes, it can also greatly benefit your wealth. A charitable trust serves as a tax-free vehicle for property that will significantly appreciate over time, such as investments. If you have property that does not generate income, you can also sell it to create a charitable trust and retain the full value of the asset without losing any of it to capital gains tax.

Due to the fact that a charitable trust allows you to still leave property to your beneficiaries alongside a charity, you can also substantially add to the assets you leave your loved ones while still giving back to a great cause.

Our Wills and Trusts Lawyer in Daytona Beach Can Help You Give Back 

Charitable trusts are a great way to give back, but only if they are executed properly. At Bundza & Rodriguez, our Daytona Beach wills and trusts lawyer can advise on the type of trust right for your situation and ensure it is drafted properly so you can protect the legacy you want to leave behind. Call us now at 386-252-5170 or contact us online to schedule an appointment and to learn more about how we can help.

Source:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0736/Sections/0736.0103.html