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What do you need to know about charitable trusts?

The overall benefits of establishing a trust as part of an estate plan have been discussed in previous posts here. But, as has also been mentioned previously, there are a wide variety of different types of trusts that New Jersey residents can consider. Charitable trusts, for instance, are gaining in popularity. So, what do our readers need to know about charitable trusts?

First and foremost, our readers need to know that charitable trusts are a great mechanism for supporting the charity of their choice. But, there are benefits for the person who establishes the trust as well, particularly when it comes to taxes. For instance, anything that is put in a charitable trust won't be included in the overall value of the estate, so it won't be part of the calculation for estate tax purposes.

It is also important to understand that charitable trusts are almost always irrevocable trusts. This means that whatever is put into the trust, whether it is real property or funds, will not be accessible to the person who establishes the trust.

But, it is also important to know that in many cases a charitable trust is established in such a way that some proceeds from the assets in the trust will still be distributed to the person who establishes the trust. Then, upon death, the assets in the trust transfer in full to the charity in question. There are many different options when it comes to charitable trusts, so New Jersey residents will want to make sure that they get the right information about the particular issues they want to address.

Source: FindLaw, "Tax Incentives for a Charitable Remainder Trust," Accessed April 8, 2017

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