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How Do I Set Up A Charitable Trust?

Posted by Dana Law Group on March 29, 2022

What we do with our assets in the event of our absence is always a challenge. Trusts are a great way to protect your money while still making sure that the people and organizations you care about have some resources and material support.

Here’s how a charitable trust can protect your financing and set yourself up for long-term giving.

What Is A Charitable Trust

A charitable trust is a type of irrevocable trust that allocates one or more beneficiaries as the recipients of your funds or assets. An irrevocable trust can not be altered after being created, so once your assets are in the trust, they are in forever. These trusts can have multiple beneficiaries with a charitable organization also included.

There are strong frameworks in place for this type of trust. A charitable trust is a common structure for holding your assets in a trust and there are even ways of organizing a charitable trust that allows private individuals to have access to the trust’s assets before the charitable organization.

Are There Different Types Of Charitable Trusts?

There’s a popular type of charitable trust known as a charitable remainder trust. This trust allows you to leave your assets to beneficiaries first and then have the remainder go to a charitable organization. This is an ideal option for people who are looking to set up specific individuals with assets and funds, but also to leave some potential for charitable giving inside their trusts.

As with every approach to investment, there are advantages and disadvantages of a CRT.

Advantages of CRT

The biggest advantage is that you can name private individuals as the beneficiaries of your trust. Best of all, this can include yourself! You can earn income off of the interest from your trust during your lifetime.

This gives you much more flexibility with a CRT than with types of trusts that leave you out of the financial picture.

Disadvantages of CRT

CRTs require assets that appreciate in value and earn money. This means that low-interest trust assets are not a good choice for this type of trust. You need a high volume, or high earning, asset in order to make a CRT work best for all parties involved.

What Is A Charitable Lead Trust?

A charitable lead trust, or a CLT, is a type of trust that sets aside a portion of the investment to a charitable organization first. If you want to make sure that your organization is always getting a slice of the pie before other considerations, then a CLT is the right choice for your assets.

Set Up A Charitable Trust With Financial Experts

The legal experts at Dana Law Group can set up your charitable trust. They can walk you through the different types of charitable trust, the ins and outs of this investment, and make sure your legal arrangements are iron clad.

Get in touch today to make a smart investment choice!