Charitable Trusts

The beauty of estate planning is that you can use your money to benefit anyone you choose.  This is true whether the value of your property is modest, you are fabulously wealthy, or anything in between.  There is no rule requiring you to make your family the beneficiaries of your will.  If you do not write a will, then your closest surviving relatives will inherit your estate, but if you do, the probate court is legally obligated to follow the instructions in your will.  The beneficiaries can be anyone you choose, including near or distant relatives, friends, or even charitable organizations that you want to support.  Just as your will is not the only way to transfer property to family members in your estate plan, you can also make charities the beneficiaries of non-probate assets.  There are clear benefits to establishing a trust, whether the beneficiary of the trust is a family member or a charity.  To find out more about setting up a charitable trust as part of your estate plan, contact a Bronx estate planning lawyer.

How Charitable Trusts Work

A trust is a non-probate asset which means that, after the grantor of the trust, the person who established it, dies, the trust does not become part of his or her estate in probate court.  If you establish the trust as an irrevocable trust and transfer property to it during your lifetime, the trust assets do not legally belong to you, so you do not pay taxes on them.  If it is a revocable trust, the assets still belong to you and you are still responsible for paying taxes on them, but when you die, the trust will become its own separate entity instead of becoming part of your estate.

As its name suggests, a charitable trust is one designed for a charitable purpose.  Its trust instrument might instruct it to make annual donations to one or more existing charities until the funds run out.  It might also instruct it to put up the money to establish a new charitable organization.

Is Establishing a Charitable Trust Better Than Leaving Money to a Charity in Your Will?

If you want to give money to a charity, you can simply indicate in your will that the charity should inherit a certain amount of money from your estate when the estate settles.  If you do this, it will delay when the charity can receive the money, because it cannot get the money until probate is finished.  Furthermore, the assets in your estate are vulnerable to creditor claims in probate court, and the personal representative must use it to satisfy any tax obligations when filing your final tax return.  This could reduce the amount of money that the charity receives.  If you support the charity through a trust, you will not need to pay taxes on the money.

Schedule a Confidential Consultation With a Bronx Estate Planning Attorney

An estate planning lawyer can answer your questions about charitable trusts and other ways to use your estate plan to support charitable organizations.  Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.

Source:

nysenate.gov/legislation/laws/EPT/8-1.1