Types Of Charitable TrustsThere are basically two main types of charitable trusts to choose from, charitable remainder trust and a charitable lead trust. Both trusts accomplish the same thing in that they are a way for you to give to a charity and they have tax benefits for the giver but that is where the similarities end. They sound very similar but they are not. A charitable remainder annuity trust and a charitable remainder trust are basically the same thing except that in an annuity trust you receive a annuity payment. Not all remainder trusts have to be annuity trusts. The asset you may be giving could be real estate or something else that doesn't create an annuity payment. A charitable remainder trust allows you to keep the assets under your control for your entire life. You enjoy the benefits of the real estate, dividends, income etc. from what it is you are planning on giving while you are alive. You also enjoy a tax deduction for giving the asset and you can also remove the taxable asset from the books. If you have the money or assets to give and want to leave something to charity when you pass this is a great way to be a philanthropist and still benefit from your asset while you are living. Basically once you pass the assets that you are keeping in the charitable trust pass on to the beneficiary whom you name in the charitable trust. The beneficiary must be a charitable organization, religious organization, non-profit university or research foundation for you to be allowed to give to them in this method. You may also change the beneficiary of the trust at any time during your life or by will. A charitable lead annuity trust and a charitable lead trust are the same thing again and like with a remainder trust a lead trust doesn't have to be an annuity trust. A charitable lead trust is kind of the opposite of a remainder trust. Why? While you are alive the asset benefits the charitable organization of your choice. Any income or access to the asset is under the control of the charitable organization and when you pass, the ownership of the asset passes to your beneficiaries such as your children or spouse and out of the hands of the charitable organization. It is then up to your beneficiaries what they want to do with the asset. There are many tax benefits with either type of trust. For both trusts you are allowed to take a one-time tax deduction for the gift. You may also sell an asset in a charitable trust without incurring capital gains tax. Also you not longer have to show the asset as part of your net worth. Charitable trust are complicated giving entities and you should consult your tax adviser about the exact tax benefits if you are considering setting up a charitable trust. There are many charitable trusts set up in the world today that still live on many years after the proprietor's death. You can check the registry of charitable trust with the federal government if you are looking for information on a specific trust. The money and other assets that have been contributed by these entities has done worlds of good and will continue to be a prime way for a person to give and benefit society while they are alive and after. |