Charitable giving is often an important component of a well-rounded legacy. Individuals with resources want to support their loved ones, but they may also want to provide assistance for nonprofit organizations or scholarship funds.
Charitable giving requires careful consideration during the estate planning process. Many people who intend to provide regular charitable support may choose to establish a charitable remainder trust. Doing so allows them to provide support for people they know while simultaneously providing support for charitable causes.
Funding a trust can be a more powerful way of expanding a legacy than simply naming a charity as a beneficiary.
Trusts allow for greater control
Typically, the people and charitable organizations named as beneficiaries in a will receive assets directly. Bequests generally lead to one-time support for a charitable cause. The testator drafting the will has to split their current resources between intended beneficiaries and charitable organizations.
Charitable remainder trusts are different. A well-funded trust can provide continued support for specific beneficiaries. At the same time, annual distributions to specific charitable causes are also possible.
The trust can provide support for beneficiaries for the remainder of their lives, and then charitable causes may receive the balance of the resources contained by the trust after the beneficiary dies. The assets used to fund a trust and the specific instructions provided regarding construction and the distribution of its resources determine how a charitable remainder trust supports beneficiaries and nonprofit causes.
Discussing personal plans for charitable giving can help those planning their estates properly structure their trusts. With the right plan, those who fund trusts can amplify the impact of the resources they leave behind when they die.