Creating an estate plan requires the creator to evaluate their wishes so they can get it put on paper in a legally enforceable manner. Charitable goals can be an important part of an estate plan for people who want to support their favorite causes, organizations, religious groups or other programs.
A comprehensive estate plan can identify which charities should have the benefit of the assets. Using charitable trusts can set a specific plan in place that makes the creator’s wishes easy to follow.
A charitable trust combines charitable giving with broader estate planning goals. Instead of just making a single gift outright, a charitable trust sets a structured arrangement that controls how the assets are managed, who will receive the benefits, and when the charity receives its portion. Two types of charitable trusts can be used.
Charitable lead trusts
Charitable lead trusts provide payments for a set number of years or a defined period. Once that period ends, the remaining assets pass to the other named beneficiaries. This type of trust allows the creator to support the charity soon after their death, with the possibility of providing for their loved ones after the charity.
Charitable remainder trusts
Charitable remainder trusts work in the opposite way. They provide for the beneficiaries of the creator for a defined period. Once that period is over, the remaining assets in the trust will pass along to the named charities.
Evaluating charitable trusts is an important part of the estate planning process. It’s critical for anyone considering this to work with someone who’s familiar with their wishes and who can assist with getting everything set up properly.