When you are engaged in inheritance planning you are usually going to be drawing up a list of recipients, and of course the names of your loved ones will comprise that list. But many people feel as though they would like to include a charitable organization or organizations as well, and there are a number of estate planning vehicles that are commonly used to enable efficient charitable giving.

Many of them can provide you as the donor with some benefits in your own right, and one of these is the charitable remainder trust. These are especially useful if you are looking for a way to give something back in the form of appreciated securities while deriving income for yourself in the process.

With these vehicles you fund the trust and name yourself as the beneficiary if you want to receive distributions from the trust, but you can name anyone you want to as the beneficiary. You could also name yourself as the trustee. The beneficiary must receive regular, ongoing distributions from the trust of at least 5% and not more than 50% of its value each year.

The reason why funding the trust with appreciated securities is advantageous is because the transfer is not subject to capital gains tax. Future earnings are not taxable either since the remainder of the trust is going to be donated to a charity or other tax-exempt entity.

Through the creation of the trust you are also removing the value of the assets used to fund the vehicle from your estate, thus reducing its taxable value. In addition, the remainder value of the trust that will be passed along to the charity after it expires qualifies for a charitable deduction.

Charitable remainder trusts can provide the best of both worlds and they are ideal solutions for many people who would like to include philanthropic efforts as a part of their larger legacy.

The Augulis Law Firm is a member of the American Academy of Estate Planning Attorneys.

For many people an important part of advanced estate planning is providing funds for a charity close to their heart. If you want to use your estate plan for a bit of charitable giving, a charitable remainder trust may be a great option. This Irrevocable Trust provides many benefits to you and your estate while also helping you help others.

Save on Taxes

When you create a Charitable Remainder Trust you can save money on three different types of taxes. First, you will receive an income tax deduction for the year when you first create the trust. If you like, you can spread that deduction out over five years of income tax returns. You will also save your family money on estate taxes since an Irrevocable Trust holds items that are not part of your taxable estate. When you place assets into a charitable trust, they no longer belong to you.

Receive a Steady Income

When your items are in a remainder trust, you will still have some benefit from those possessions. The charity that holds the trust will invest your assets. In return, you will receive either a yearly set payment or a yearly percentage of the trust value. This steady income allows you to reap some of the benefits of the trust earnings. The income from a charitable remainder trust ends upon your death. At that time all funds and assets in the Trust will officially belong to the charity.

Give to Cause You Love

Charitable trusts not only allow you to save money and receive an income; they also allow you to improve your community. The funds from your Trust will continue to work to help others long after your death. For this reason, charitable trusts are a popular option in legacy planning. By choosing a charity that expresses your values and morals, you can leave a lasting impression of upon your town and possibly the world.

The Augulis Law Firm is a member of the American Academy of Estate Planning Attorneys.