Establishing a Charitable Trust

While many testators write their wills or create trusts with their family members in mind, many also want to give some of their assets to charity. Although this could leave some relatives disgruntled, creating an airtight trust guarantees that the funds will be used according to the decedent’s wishes and will not be contested. If you are considering leaving some of your money to a charity which you are passionate about, please contact an experienced contested estates attorney who can ensure that your wishes are respected.

Charitable Remainder Trusts

There are a number of ways that a person can designate assets for donation to charity. However, one of the most common methods is through the creation of a charitable remainder trust. These types of trusts allow the trustor to donate assets that do not generate income into a trust account, which will then make an annual payment to whichever beneficiary the trustor chooses. Once the term of the trust has ended, all assets remaining in the trust will be distributed to the charity of the decedent’s choice. By utilizing this type of trust, trustors are able to receive a steady stream of income, in addition to the peace of mind that comes with knowing that their assets will be distributed to a deserving institution.

Charitable remainder trusts also provide trustors with an income tax deduction when the trust is created. Furthermore, any profit from the sales of investments within the trust will not be subject to capital gains. The downside to these types of trusts is that they are irrevocable, which means that they cannot be canceled. However, trustors can decide to change the beneficiary to a different charity and if they serve as trustees, can decide how the assets should be invested.

Charitable Lead Trusts

Charitable lead trusts, on the other hand, make annual payments to a charitable organization during the trust’s term, which can be as long as the trustor desires. The charity will receive the same payment each year, regardless of how the investments perform. At the end of that term of years, the remaining assets will pass directly to the listed beneficiaries or can continue to be held in a different trust already established for the beneficiaries. Beneficiaries will also not have to pay an estate or gift tax on the proceeds of the trust.

Call Today to Discuss Your Case with an Experienced Contested Estates Attorney

While people may want to leave the bulk of their assets to family members, many also want to leave some to a specific charity. By creating a charitable trust, trustors can guarantee that their funds will be distributed in accordance with their wishes, while also providing for themselves or their loved ones, and avoiding a will contest at a later date. To learn more about creating a charitable trust or incorporating one into an already existing estate plan, let the experienced contested estates attorneys at Orlowsky & Wilson, Ltd. Attorneys at Law help by evaluating your case. Please call us at 847-325-5559 today.

Updated as of July 2019
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