Charitable Trust Lawyers

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What Is a Charitable Trust?

A charitable trust is a trust made for a charity. In order to be a valid charitable trust, it must have a purpose for the benefit of the public. Charitable purposes include: giving to the poor, advancing education and knowledge, church purposes, promoting health, and advancing government interest such as a park or museum. The beneficiaries in the trust must be indefinite and not to just benefit a few individuals.

The way it usually works is that you first set up a trust, the most common type being a charitable remainder trust. Make sure that the charity you want to donate to is recognized by the IRS and has tax-exempt status. Put any assets or property you want to donate to the charity group into your trust.

The charity will act as the trustee by deciding how to invest the property and assets in the trust. The charity will give you or a beneficiary you named a portion of the income made by investing the property and assets for a certain time period, which could be as long as the rest of your life (you get to specify the payment period in the trust document). At the end of this time period, the property in the trust goes to the charity.

What If the Charitable Purpose Fails?

Usually a charity will shut down or the charitable purpose will become impossible to follow due to an unforeseen event. If the settlor or creator who intended the trust to go to the charity, but the charity no longer exists, the court will use the Cy Pres doctrine and choose a charity that is “as near as possible” to the settlor's charitable intent.

For example, if the settlor wanted his trust property to advance a certain catholic school, but the catholic school shut down after settlor dies, the court will choose another catholic school for the charitable trust.

What Are the Tax Breaks for Me or My Beneficiaries from the Charitable Trust?

There are certain tax breaks you and your beneficiaries can incur as a reward for you good services to charity:

How Do I Receive Income from My Charitable Trust?

There are two common methods for receiving income from your charitable trust:

Should I Consult a Lawyer When Planning My Estate?

Planning your estate can be a complex and confusing process. You have many options, and sometimes it is hard to understand the benefits and drawbacks of some of these options. You may want to get help from an estate planning attorney. Your attorney will be able to advise you of what options are available, and help you decide how to organize your estate in a manner most beneficial to you and your beneficiaries.

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Last Modified: 07-16-2014 02:23 PM PDT

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