The Advantages of Charitable Trusts
Do you have a significant college reunion that’s inspiring you to make a large gift? Perhaps there is a capital campaign for your favorite cause. These are the kinds of giving opportunities that should have you considering a charitable trust. For example, a charitable remainder trust allows you to make a major gift while still affording you the security of a reliable income stream—the ultimate win-win.
In terms of tax benefits and structure, a charitable trust (in the form of either a remainder trust or a lead trust), differs from other types of giving, such as outright gifts or bequests and donor-advised funds.
With a charitable remainder trust, you generally designate how you would like to receive income during your lifetime with the charities of your choice getting the “remainder” at your death. Your options are to take a fixed amount as an annuity (an annuity trust) or to take a percentage of the trust’s assets annually (a unitrust).
You also get to choose the duration of the trust—maybe 10 years, or perhaps the duration of your lifetime and your spouse’s lifetime. These choices will affect the IRS’s determination of the “remainder interest” that the charity will be likely to receive, which dictates the charitable deduction you will receive when you fund your trust.
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