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» Understanding Charitable Trusts

How Did I Do It? > Personal Finance > Understanding Charitable Trusts
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What is it? A charitable trust is something that is used to make a way that your assets can be converted into a stream of income that will be life long in nature, so that the assets you have won’t be just a source of tax revenue for the government, but instead can be a help to your children.
The charitable trust won’t help just by offering the income stream, but also be lessening the taxes you pay now, as welll as those that your kids or heirs will pay when the time comes to pay the estate taxes.

Recently charitable trusts have been becoming more popular because they also offer a very valuable bonus in terms of what is paid currently, and what will be paid in taxes in the future, and help those of us who choose to, to be able to provide for causes and/or people that are foremost in our minds.

Trusts such as these are irrevocable and don’t generate capital gains taxes or immediate estate taxes either.

In recent years a charitable trust setup has become far more popular because they provide a valuable advantage to us in terms of what we pay currently and those taxes we will pay in future years, and permit us to provide for those causes or people who are important to us.

These trusts are irrevocable and will not generate capital gains and estate taxes immediately.
The charitable trust formation will increase your income for the rest of your life because it reduces your current tax payments.

Charitable trusts take some careful drafting to make them completely legal and legitimate but they are absolutely more than worth your time to look into formation of one. Of course some legal strictures apply to what you can and can’t do with a charitable trust.

There are excise taxes which are given for acts of what is termed self dealing, meaning any type of transaction between the charitable trust and an individual who is termed a disqualified person such as a family member or the family of a contributor.

Based on what you want to do with the money when you are gone, you pick a kind of charitable trust to build..

At the end of the trust, a specific time or year set by you, all assets are given to a charity that you will select.

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