When it comes to estate planning, trusts are a popular way to ensure your assets get distributed the way you want. There are several types of trusts, but charitable trusts are one of the most common among Connecticut residents.
What is a charitable trust?
A charitable trust is created for the purpose of giving to a charitable organization. The grantor, or person creating the trust, transfers assets into the trust. The trustee, who is typically a bank or financial institution, manages the assets and disperses them according to the grantor’s instructions.
What are the main advantages of a charitable trust?
One of the main advantages of a charitable trust is that it can provide a stream of income for the charitable organization. The trustee can invest the assets in the trust and use the earnings to support the charity. Another advantage is that charitable trusts can be used to reduce your taxes. When you transfer assets into a charitable trust, you may be eligible for a charitable tax deduction.
Are there different types of charitable trusts?
Yes. One type is a charitable remainder trust. This trust provides income to the grantor during their lifetime and then transfers the remaining assets to the charity when the grantor dies.
Another type is a charitable lead trust. With this trust, the charity receives payments for a set period of time, and then, the remaining assets go to the grantor or their heirs. Lastly, there is a charitable pooled income fund. This trust pools assets from multiple donors and then makes payments to the beneficiaries.
If you’re interested in setting up a charitable trust, it’s important to understand the process and how to ensure that the trust is set up correctly. Once you’ve created the trust, you’ll need to fund it by transferring assets into it. The trustee will then manage the assets and distribute them according to your instructions.