If you’re like most Indiana residents, you’ve worked hard to establish your estate. Some people use trusts to provide for their loved ones. However, you can also use a charitable trust to make the most out of donations to charities.
Determining the right type of trust
One of the first things to determine is whether you need a charitable remainder trust or a charitable lead trust. A charitable remainder trust lets you name yourself and other people as beneficiaries. Then, the remainder of this trust goes to a recognized charity or nonprofit organization.
A charitable lead trust is the opposite of a charitable remainder trust. Charitable lead trusts mean that the bulk of a grantor’s assets go to their named charities for a set period. Once this term expires, what’s left in a charitable lead trust goes to its beneficiaries.
Maximizing your contributions
You don’t have to donate to charity by establishing a trust. However, charitable trusts have beneficial terms that often help a grantor reduce their taxable income. This situation is helpful for someone who wants to donate as much money or assets as possible while reducing tax-related expenses.
Having flexibility
High net worth donors understandably value flexibility regarding their charitable donations. Fortunately, charitable trusts offer the freedom many grantors seek. Besides a charitable lead trust or a charitable remainder trust, someone seeking to donate assets has other flexible options.
A few of these selections can include a testamentary charitable remainder unitrust that goes into effect after a grantor passes away. You may also consider a dynasty trust, designed to help families preserve wealth for multiple generations.
It takes time, effort and money to provide charitable donations through trusts. However, many individuals feel it’s worthwhile to ensure their favorite organizations receive funding.