Understanding charitable trusts

If you enjoy giving back to your Florida community by donating to your church or favorite charity, have you ever thought about establishing a charitable trust to give your donations more structure and certainty? If you are unfamiliar with charitable trusts, it likely will surprise you to learn that not only can such a trust benefit your church or charity, it also can benefit you in a variety of ways.

When you set up a charitable trust, you can split the assets you put into it between your designated charitable beneficiary and a designated noncharitable beneficiary, who can be you yourself if you so desire. In addition, you can designate yourself as your trust’s trustee.

Immediate and long-term benefits

You can choose to establish either a charitable remainder trust or a charitable lead trust. Whichever you choose, your trust benefits both you and your charity. Your benefits include the following:

  • You maintain control over the trust assets.
  • You have significant flexibility regarding the way in which you distribute the trust’s assets and the income therefrom.
  • You receive income tax benefits.
  • You fulfill your charitable goals and objectives.

Additionally, you can specify how long your trust remains in existence. You can choose a specific period of years, generally, about 20, your lifetime, or the lifetime of your noncharitable beneficiary should you designate someone other than or in addition to yourself.

Charitable remainder versus charitable lead trusts

In a charitable remainder trust, your noncharitable beneficiary receives an annual payout of the income produced by your trust’s assets. At the end of the trust period, your charitable beneficiary receives the assets themselves.

A charitable lead trust works exactly the opposite. Your charitable beneficiary receives the annual payout of asset income and your noncharitable beneficiary receives the assets themselves at the end of the trust period.

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