Whether you want to create a charitable lead trust, a charitable remainder trust, or a pooled charitable trust, people with any budget can leave money to charity. In this way you can set up an estate plan where a deserving organization gets help. These trusts mean that you and your family can also reap the benefits.
While this used to be an option only for those who could afford to create a six figure donation, now almost anyone can give to charity through a pooled charitable trust. You usually can add to a fund with a $5,000 or $10,000 donation. Charities, such as museums and universities, will often have their own pooled trusts set up (saving you the legal fees of creating one). Then whoever wants to be a donor can give. It can be compared to a mutual fund. You would then receive income from any return on investment. You can also add a thousand dollars or so at any time that you wish. Some of what you donate can be translated into tax deductions. The income you make will be taxed though. If you want, you can push these income payments back, treating the trust as part of your retirement savings. You can ask to collect the income at a certain age, and then have a good deal of money waiting for you upon retirement, if the charity used your money well.
What does this mean for your estate plan? For one thing, this means that your charitable donations will never have to be wrung through probate. This can be a brilliant way to give to an organization that is close to your heart. Then whoever you name as a beneficiary of the trust would receive the income from your charitable giving.
Then there are charitable remainder trusts. These entail donating a substantial amount. An IRS-approved charity can receive property from you through a trust that you set up yourself. The charity you give to would be the trustee, and so would be the one to choose how your donation is used. When your donation starts generating income, you, or your beneficiary, would receive this income. You can set up the income as a fixed annuity, or as a percentage of the trust assets. You would receive tax deductions from this donation as well. At your passing, or at some date that you name, your property will be irreversibly handed over to the charity, and without being taxed either.
More complicated still are charitable lead trusts. This sort of charitable trust is usually the option of the wealthy, and this trust has the added benefit of evading the estate tax. A charitable lead trust can be made at any point, but usually this is the sort of trust that is part of an estate plan. You can place assets in a trust for the charity of your choice, and the charity would annually receive donations from the trust. When a specified time is over, the assets that remain go to your beneficiaries. This trust usually will last for a decade or two. Now you cannot take this trust back once it has been set up. It is important to weigh the complex benefits and regulations that this trust entails, because it usually means that you are putting up no less than one million dollars. This is not a decision you want to make uninformed.
If you want to create a charitable in your estate plan, you can consult a probate lawyer to understand how this process works. You do not want your plans to be waylaid by complex probate and estate laws, so contact a legal expert today!