Is a Charitable Trust Right for You?

Estate planning ensures your assets are distributed according to your wishes. While traditional wills and trusts are common tools for managing your estate, charitable trusts offer an alternative approach that allows you to support the causes you care about.

What is a charitable trust?

A charitable trust is a legal entity that combines philanthropy and estate planning. When you establish a charitable trust, you set aside assets to be managed and invested by a trustee. The income generated from these assets is then donated to the charitable organization(s) of your choice. This approach can provide advantages for anyone hoping to make a lasting impact on their community or favored charitable causes.

Benefits of charitable trusts

Here are some of the main benefits of charitable trusts:

  • Tax advantages: Charitable trusts can offer significant tax benefits. By reducing your taxable income, you can preserve more wealth for both your beneficiaries and charitable causes.
  • Ongoing philanthropy: A charitable trust allows you to create a legacy of support for the causes that matter most to you. It provides a consistent stream of income to your chosen charities, so your impact extends beyond your lifetime.
  • Asset protection: Establishing a charitable trust can help protect your assets from creditors and legal claims, as the trust legally owns the assets. This can be especially valuable if you have concerns about potential financial liabilities.
  • Tailored giving: You have flexibility to dictate how the trust's income is distributed to charities.

Charitable trust considerations

When creating a charitable trust, consider these tips:

  • Find the right charities: Take the time to identify the charitable organizations that resonate with your values and objectives. Make sure they are recognized as tax-exempt organizations under IRS guidelines.
  • Choose a type of charitable trust: There are two primary types of charitable trusts - charitable remainder trusts (CRT) and charitable lead trusts (CLT). A CRT provides income to your beneficiaries for a specified period before transferring the remainder to charity, while a CLT provides income to charity first and then to beneficiaries.
  • Get professional guidance: Estate planning, especially involving charitable trusts, can be complex. Consult James Bart Leonardi, LLC: we can help you navigate the legal requirements and ensure your trust is established correctly.
  • Choose your assets: Decide which assets you want to fund the trust with. This could include cash, stocks, real estate or other assets. The choice should align with your financial goals and tax strategies, so be sure to talk to your financial advisor before making any final decisions.

If a charitable trust is in your future plans, reach out to James Bart Leonardi, LLC for assistance today.

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