Charitable Remainder Trusts: Philanthropy in Death Can Benefit You in Life
- Posted in: Asset Protection
If you have a favorite cause or charity you have probably considered leaving some money to that charity in your estate plan. Perhaps you’ve even taken it a step further and toyed with the idea of specifying that the executor of your will or the trustee of your trust to set up a trust in the name of your favorite charity, rather than simply giving a one-time gift.
If you have ever considered either of these options you may want to ask your estate planning attorney about setting up a Charitable Remainder Trust, which, as explained this Elder Law Answers article, not only supports your favorite charity after your death, it also benefits you during your lifetime.
“A charitable remainder trust is an irrevocable trust that provides you (and possibly your spouse) with income for life. You place assets into the trust and during your lifetime you receive a set percentage from the trust. When you die, the remainder in the trust goes to the charity (or charities) of your choice.”
The altruistic reasons for setting up a charitable remainder trust are obvious, but here are some other advantages during your lifetime you may not have considered:
- Reduction of your current taxable income
- Charitable tax deduction at the time you fund the trust
- Diversification of assets
- Income from the trust during your lifetime
In addition to all of these financial advantages, setting up a charitable remainder trust provides you with the opportunity to leave a family legacy and impress your values upon your children and grandchildren.
You should be mindful that charitable remainder trusts are irrevocable trusts, which means once they’re created they are difficult to be undone, so it’s not something to take lightly. If you are interested in creating a charitable remainder trust, call our office and we'd be happy to discuss this option with you before you take action.