Charitable Trusts, Day Three

Over the past two days, we’ve covered Charitable Trusts.  Again, a Charitable Trust is an irrevocable trust established for the benefit of a specific charity; it also can potentially give the trust grantor a tax deduction.

If executed correctly with the help of a qualified attorney, a Charitable Trust entitles the donor the opportunity to deduct a portion of the amount contributed to the specific charity as a tax deduction. Depending on the amount of the Charitable Trust, that deduction could be sizable.

Over the past two days I’ve mentioned that both the IRS and the State Attorney General’s office takes these types of trusts very seriously; for that reason you don’t want to attempt to execute one on your own.

There are several types of Charitable Trusts; over the next couple of days we’ll address those types.

Specifically, we’ll be covering the various types of Split-Interest Charitable Trusts.

Simply put, Charitable Split-Interest Trusts are trusts that have two kinds of beneficiaries: both charitable and non-charitable ones.  Why might this type of trust be of interest to you?

It might be of interest to you if you have both philanthropic and family needs to consider in distributing your assets.  You want and need to care for your family, but you also want to take advantage of the tax breaks that you’d receive from setting up some form of Charitable Trust.  This “Split-Interest” type of Charitable Trusts would allow your assets to do both.

First you’d have to determine who the beneficiaries would be—both the charitable ones and the non-charitable ones—and then you’d begin with your attorney by selecting which of the different types of split-interest trusts would best serve you and your needs.

You could create your Charitable Trust to either be active while you’re alive, or to kick in once you’ve passed away.  If you choose to enact the trust to be active during your lifetime, the law with regard to creating a Split-Interest Charitable Trust is that the charitable arm of the trust must be irrevocable.

Over the next two days we’ll cover the specifics of these Split-Interest Charitable Trusts.  Stay with us!

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