If you have a favorite cause, foundation or charity you have probably considered leaving some money to that organization in your will or living trust. Perhaps you’ve even taken it a step further and toyed with the idea of specifying that the executor of your will or trustee of your trust set up a trust in the name of your favorite charity, rather than simply giving a one-time gift.
If you have ever considered either of these options you may want to ask your estate planner about setting up a Charitable Remainder Trust, which, according to this Elder Law Answers article, not only supports your favorite charity after your death, it also benefits you during your lifetime.
“A charitable remainder trust is an irrevocable trust that provides you (and possibly your spouse) with income for life. You place assets into the trust and during your lifetime you receive a set percentage from the trust. When you die, the remainder in the trust goes to the charity (or charities) of your choice.”
The altruistic reasons for setting up a charitable remainder trust are obvious, but here are some other advantages you may not have considered:
Reduction of your taxable income
Charitable tax deduction at the time you fund the trust
Diversification of assets
Income from the trust during your lifetime
In addition to all of these financial advantages, setting up a charitable remainder trust provides you with the opportunity to leave a family legacy and impress your values upon your children and grandchildren.
Please remember that charitable remainder trusts are irrevocable trusts, which means once they’re done they can’t be undone, so it’s not something to take lightly. If you are interested in creating a charitable remainder trust, call our office or talk about it with your own attorney before you take action.