Many turn to estate planning to help build a more secure and vibrant future for their next of kin. In the spirit of generosity, many also wonder how their assets can go to benefit the charitable causes that invigorate them.
One notable way is to simply bequeath whatever funds or assets you want to the charity, and while some may partake in this, others take interest in the tax benefits that a trust can afford them. There are two principal trusts that can help.
How do charity trusts work?
The following charitable trusts help, with your priorities and circumstances usually dictating which one you actually end up choosing. Both accomplish similar goals but with slightly different methods.
Charity lead trust: According to Fidelity Charitable, this trust prioritizes the charity of your choosing first. After you put money in the trust payments then siphon off to that cause over a period of time (whether it be to the end of your life or just a number of years). At the end of this period, the leftover money goes back to you or your beneficiaries.
Charity remainder trust: This trust prioritizes you and potentially your beneficiaries. After you fund the trust, you will get money from it during your life. However, once you pass, all that remains in that trust goes to a charitable cause.
What can go in these trusts?
So, as you can see, it can come down to who you want to prioritize first. In addition, you can expect to see tax benefits come out of this for both sides. Fidelity comments on a number of assets that may be able to be placed within either of these trusts, including real estate possessions, money, with exceptions being made for other assets that bear complexity. For those in this category, consulting with a professional estate planning firm can likely give you a better idea of whether or not your assets make the cut.
Leaving the world a better place is something that many people seek to do, and luckily through estate planning, there are a number of ways to accomplish this.
