If you have philanthropic aspirations in New York and want to give back as much as possible, charitable trusts come with a number of financial benefits that may be helpful to you. People use them to optimize their assets for their beneficiaries, charities and themselves in one go. These types of trusts have helped countless public-spirited individuals maximize the amount that they’re able to give to charitable causes while also looking out for themselves and their beneficiaries.
Two main types of charitable trusts
If you’re going to establish a charitable trust, chances are that it will either be a charitable remainder trust or a charitable lead trust. These two options are mostly the same but are designed for slightly different specific purposes. Something to keep in mind with both of these types of charitable trusts is that any charity you choose has to qualify with the IRS in order to be a recipient of these charitable deductions.
Charitable lead trusts
The process of estate planning with a charitable lead trust starts by distributing part of the proceeds to charity. For this, you’ll get a charitable donation tax deduction equivalent to these payments. Everything else that’s still left over from the principal amount then gets distributed amongst your beneficiaries.
Charitable remainder trusts
If you go with a charitable remainder trust, it means you’re selecting to first get income by distributing the assets you put in the trust that aren’t producing income. In addition, you are given a charitable donation tax deduction.
The size of this deduction is determined by looking at all of the assets that you have designated for a charity are currently worth. The charity you’ve picked out will get the remainder of these assets either at the term’s end or when you pass away.
Charitable trusts can be a helpful way of taking care of everything in your estate plan all at once. If you have nonessential assets like real estate or stock and you want to ensure that everyone gets the most out of them, you might want to look into this trust type.