Whether giving time or money, most people take joy in engaging in charitable endeavors. Of course, with life’s stress getting in the way, a lot of individuals find it challenging to give back as much as they would like. Fortunately, there is a way for these individuals to further identified charitable organizations while benefiting themselves and their heirs.
This is primarily accomplished by making a charitable remainder trust a part of one’s estate plan. Here, an individual places assets into an irrevocable trust, which then earns income that is paid out to a named beneficiary for a specified period of time. Then, when the specified time period passes, the assets remaining in the trust are transferred to an identified charity. This allows one to earmark certain assets for charitable donation while retaining the ability to have the trust earn income.
There’s another benefit to this trust type. Those assets placed in this trust type are exempt from taxation, which means that an individual can reduce the taxable value of his or her estate. Depending on the facts at hand, this can result in major savings.
While creating a charitable trust can contribute to social good, it can also benefit an individual’s estate and, thereby, his or her other heirs. However, since this type of trust is irrevocable, it should only be created after careful consideration.
Therefore, those considering this estate planning vehicle should thoroughly vet the charities they intend to name as beneficiaries to the trust and consider how placing certain assets into that trust will affect the rest of the estate and its heirs. To discuss this complicated matter, Californians can sit down with an estate planning attorney who can guide them through the process to meet estate planning goals.