When many people think about establishing a charitable trust, it seems like the kind of thing that only the super-rich do, and even then, mostly for the tax advantages. It is true that charitable trusts offer significant tax advantages. However, they are not only a tool for those with a considerable amount of money. In fact, even moderately sized estates may benefit considerably from using a charitable trust as part of an estate plan.
Charitable trusts create both direct and indirect value in your estate plan. For instance, it is possible to receive some income from the trust, which is not taxed like traditional income. In most cases, this payout is either a fixed amount that the trust pays you at regular intervals, or a percentage of the trust itself.
Charitable trusts also offer a way to sell certain kinds of property without incurring taxes. If you have a piece of property that increase in value, you may place it in the trust and sell it, typically avoiding capital gains taxes. For many people, this itself is enough reason to establish a charitable trust.
Beyond these very practical advantages, charitable trusts offer you an opportunity to infuse your estate plan with dignity and purpose beyond simply stockpiling resources. After all, if your resources aren’t working toward something, then they only sit still and accrue value without direction. Make sure to consider what a charitable trust can do for you and your estate plan as you and your California estate planning attorney work to create the legacy you wish to leave.
