Many people wish to leave a legacy of their wealth to a favorite philanthropic organization. A charitable trust is an effective way to accomplish this.
One important consideration concerns the decisions on where the money should go. A second consideration involves the structuring of the trust.
The rules of thumb for picking a charity
Before choosing a charity, USAGov recommends givers do some research on the charitable organization. Reputable entities such as the IRS, a state’s attorney general and the Better Business Bureau all provide information and tips for donors. THE BBB often provides reports on large charities as well as providing clarity on how the charity uses its funds. Givers should also check to make sure the organization meets the licensing requirements of the state it operates in, and they should check to see if the organization has a history of complaints.
For tax purposes, a donor should research if the assets given to a charity qualify for a tax deduction. The IRS provides a database of 501(c)3 organizations that allow for federal tax deductions.
The basics of a charitable remainder trust
According to Forbes, a properly structured charitable remainder trust can provide money to a beneficiary and to a charity. In certain situations, the beneficiary would receive more money and a steadier income stream with a charitable remainder trust than if the deceased left the money solely to the beneficiary. This is due to the tax benefits available to a charitable trust. The trust would provide income to the beneficiary until his or her death, and then the remainder of the trust would go to the named, tax-advantaged charity. A minimum of 10 percent of the present value of the bequest at the time of creation must go to the charity.