Have you been searching for a way to use your assets to support your favorite nonprofit organization after you pass away? If so, you might want to consider setting up a charitable trust.
Trusts of this nature will allow you and your family to help your community while avoiding taxes such as:
- Income Tax: The donations you make to your charitable trust will entitle you to claim a charitable deduction on your income taxes.
- Estate Tax: Any assets held in a charitable trust will not be counted as part of your estate for the purposes of estate taxes after your death.
- Capital Gains Tax: Assets sold by charitable trusts are not subject to capital gains taxes.
There are two main types of charitable trusts. They are:
- Charitable Lead Trusts: A trust in which the income produced by the assets is distributed to a charity for a specified number of years. The assets are then distributed to named beneficiaries.
- Charitable Remainder Trusts: A trust in which the income produced by the assets is distributed to named beneficiaries, with the remainder being given to a charity at the end of the trust.
Most San Diegans find that charitable remainder trusts are the best fit for their family’s needs. However, it is always a good idea to discuss the matter with an experienced California estate planning attorney before making a decision.
If you choose to set up a charitable remainder trust, your family lawyer will be able to help you through the process. During that process, you’ll need to make several important decisions, including:
- The Distribution Method: You can choose to distribute a fixed dollar amount or a percentage of the trust’s total asset value each year.
- The Duration of the Trust: You can set your trust up for a specified time period (typically up to a maximum of 20 years) or for the lifetime of a named beneficiary.
- The Names of Your Beneficiaries: If you forget to list a beneficiary, the income generated by the assets in your charitable remainder trust may not be distributed as intended.
When setting up a charitable trust, it is important to remember that they are irrevocable. This means it will be extremely difficult (or even impossible) to make changes once you’ve signed off on the paperwork. For this reason, you may want to take some additional time to consult with your lawyer and your family before you make your decisions.
Your Knowledgeable California Estate Planning Attorney
Do you need a skilled San Diego family lawyer to help you set up a charitable trust? If so, you have come to the right place! The Semanchik Law Group team has been helping families like yours support nonprofit organizations in a tax-advantaged way for years, and we’d love to do the same for you!
When you’re ready to get started, just give us a call at (619) 535-1811 or contact us online to schedule an initial consultation. We look forward to hearing from you!