When planning your estate, you may have already decided to give back to your loved ones to support them after you’ve passed. However, you may also want to give back to any charities or organizations you hold near and dear to your heart. If this is the case, you should understand the benefits of gifting assets through a charitable trust. The following blog explores why you should consider this option and how a Washtenaw County trusts attorney can help you set one up.
What Is a Charitable Trust?
A charitable trust is a fund that provides funds and assets via donations to a charity of your choosing. Unfortunately, many people believe the misconception that they must be exuberantly wealthy to create a charitable trust. This is far from the truth, as a gift of any size is beneficial and appreciated by charities.
Two of the most common kinds of charitable trusts are lead and remained trusts. A charitable lead trust pays out donations to charities over a portion of time. Once this time has elapsed, the remaining funds and assets in the trust will go to named beneficiaries, generally with considerable tax savings, if not tax-free.
A charitable remainder trust functions in the opposite way. This trust allows you to pay a portion of the estate to beneficiaries, and then after you pass, the remainder of the funds are allocated to charities of your choosing.
What Are the Benefits of Gifting Assets?
If you are interested in gifting assets, it’s essential to understand the benefits you can receive when establishing a charitable trust.
One of the primary advantages of gifting assets is that you can transfer them without the tax implications associated with moving large amounts of money. For example, you may be able to reduce the value of your estate, which can benefit your taxes. Similarly, gifting assets less than $17,000 per year are eligible to be exempt from filing an annual gift tax return and will not use their lifetime exemption. Married couples can gift up to $34,000 without incurring the gift tax or lifetime exemptions.
Placing assets in a trust also prevents them from depreciating, which means you can avoid capital gains taxes on these in the future.
Finally, fitting assets allow you to give back to charities, help take care of your loved ones, and plan for the future without having to liquidate your assets.
When you’re ready to plan your estate, Collis, Griffor & Hendra can help you explore the options that work best for your needs. Our dedicated legal team can help walk you through the estate planning process, which can be complex, to help you make the best decision for your financial future. Contact us today to get started planning your estate.
