Every day, Americans demonstrate their generosity by making substantial donations not just to their loved-one, but also to nonprofit organizations serving a variety of needs. Giving to charity is one of the best ways for individuals and families of the deceased to prosper while benefiting others. Gifts can be an effective way to reduce estate taxes, avoid capital gains taxes, and assist children or grandchildren with college expenses.
The estate planning attorneys at Jackson Estate Planning in South Portland, ME, offer comprehensive advice on the most efficient methods for making charitable contributions. We can ensure that your donation is optimized from a philanthropic and tax-planning standpoint.
At Jackson Estate Planning, we are seasoned lawyers, situated in South Portland, ME, who are experienced in Charitable Trusts and provide prompt legal action. Schedule a free consultation with us for more information. We are accessible round-the-clock to discuss your legal options.
Why do I need a Charitable Trust Attorney in South Portland, ME?
For any issues involving charitable trusts, it is crucial to retain the services of an experienced trust attorney. Creating a trust can be complicated, and you want to ensure that your hard-earned assets go to your chosen charity.
An estate planning lawyer from a reputable law firm who’s well equipped in charitable trusts can advise you on the various types of trusts and help you determine which may best suit your needs. Your attorney will assist you in organizing your estate in the most advantageous manner for you and your beneficiaries.
Our trust lawyers have a comprehensive understanding of all the estate planning instruments that can be used to make charitable contributions. It is possible to structure life insurance policies, retirement accounts, trusts, and other assets so that your values are reflected in the distribution of your assets during your lifetime and in your will.
What is Charitable Trust?
A charitable trust is essentially a way to organize your assets so that they benefit you, your beneficiaries, and a charity. For philanthropically-minded individuals with non-essential assets, such as stocks or real estate, a charitable trust could provide numerous financial advantages.
But how do these trusts operate? Examine the fundamentals and benefits of charitable trusts to determine if one suits your needs.
Basics of Charitable Trust
Two primary types of charitable trusts exist: charitable lead trusts and charitable remainder trusts. These trust types resemble one another but serve distinct purposes. The chosen charity or charities must be eligible with the Internal Revenue Service (IRS) to receive charitable deductions in accordance with the type of trust and terms you establish.
- Charitable Lead Trust – This type of trust first distributes a portion of its proceeds to a charity, for which you will receive a tax deduction equal to the amount of the payments. The remaining principal balance is then allocated to your beneficiaries.
- Charitable Remainder Trust – With this type of trust, you can choose to receive an income from the distribution of the non-income-producing assets you initially contributed to the trust. You will also receive a tax deduction equal to the present value of the remainder of the assets designated for the charity. At the conclusion of the term or upon your passing, your designated charity receives the remaining assets.
Once you transfer your assets to a charitable trust, it will typically sell them and distribute the proceeds in accordance with the type of trust and the terms you specify. A trust is irrevocable once it has been established, even if you suffer a personal or business financial loss. It can be beneficial to speak with a financial representative to learn more about how a trust could fit into your overall financial plan.
Advantages of Giving
When you give to charity, you can make a difference in the world, and a charitable trust can help you continue giving after your death. It is also a way to put your charitable intentions into action.
Those who want to set aside high-value assets they won’t need to support themselves in retirement can receive numerous tax incentives and financial benefits by establishing a charitable trust. By transferring these assets into a charitable trust, you can avoid paying capital gains tax on the sale of real estate or stocks that have appreciated in value.
Both types of trusts reduce an individual’s estate through charitable contributions, thereby reducing estate taxes.
Additionally, they eliminate the probate process for your beneficiaries. Using non-income-producing assets that you already own, a charitable trust can generate an income stream for you and an inheritance for your beneficiaries while you are still alive. For both types of trusts, if you leave a portion of these assets to a charity or charities, you qualify for a charitable tax deduction under the IRS’s current rules.
Charity Trust Strategies
There are numerous options to consider and strategies for maximizing the benefits of each of the various types of charitable trusts.
Here are two frequent methods:
- Replace assets for beneficiaries / heir: You have options for the income generated from the sale of your non-income-producing assets by a charitable remainder trust. For instance, those who wish to leave an inheritance to their heirs may purchase a life insurance policy and use the income generated by a charitable remainder trust to pay the policy premiums, while using the remainder to fund charitable purposes.
- Set up a donor-advised fund: You are not required to select a charity beneficiary when establishing a charitable trust. You can instead establish a donor-advised fund to direct payments from a charitable lead trust or charitable remainder trust to the charity (or charities) of your choosing. This allows you to alter your mind about a charity or add a new one.
Creating a charitable trust may be an effective, multifaceted strategy for leaving a legacy. It enables you to set aside funds for both a charity and your beneficiaries, realize certain tax advantages, and direct the distribution of income while you are still alive.
Call our Charitable Trust Estate Attorneys in our law firm now!
Donating to charitable organizations is a worthy objective, but without the establishment and maintenance of a charitable trust, it will remain merely an objective. A Jackson Estate Planning trust law attorney can assist you with your charitable trust by:
- Detailed explanation of the various types of charitable trusts
- Assisting you in establishing the trust that best serves your objectives
- Contributing your assets to the trust
- Aiding the trustee in registering the trust with the appropriate authorities
- Throughout the process, we will respond to your questions and assist with other specifics.
Contact our law offices immediately for a confidential consultation with a trust lawyer if you are interested in learning more about charitable trusts in South Portland, ME and what Jackson Estate Planning’s estate lawyer can do for you.