Overview of Charitable Trusts
A Charitable Trust in Missouri is a legal entity established to manage and distribute assets for charitable purposes. It can be set up in various ways to meet the donor's specific goals and objectives.
One common type of Charitable Trust is the Charitable Remainder Trust (CRT). In a CRT, the donor transfers assets to the trust, which then invests and manages them. The trust provides income to the donor or other beneficiaries for a specified period, typically the donor's lifetime. After the income period ends, the remaining assets in the trust are distributed to a designated charity or charities.
This type of trust can offer several tax advantages. The donor receives an immediate tax deduction for the value of the assets transferred to the trust. Additionally, the trust's income is generally tax-free, allowing the assets to grow more quickly. When the assets are eventually distributed to the charity, they are not subject to capital gains tax.
Another type of Charitable Trust is the Charitable Lead Trust (CLT). In a CLT, the donor transfers assets to the trust, which then provides income to a designated charity or charities for a specified period. After the income period ends, the remaining assets in the trust are distributed to non-charitable beneficiaries, such as the donor's family members.
CLTs can also offer tax advantages. The donor receives an immediate tax deduction for the value of the assets transferred to the trust, and the trust's income is generally tax-free. However, the non-charitable beneficiaries may be subject to capital gains tax when they receive the assets from the trust.
Both CRTs and CLTs can be tailored to meet the donor's specific needs and charitable goals. For example, a donor may choose to create a CRT that provides income to their spouse for life and then distributes the remaining assets to their favorite charity. Alternatively, a donor may choose to create a CLT that provides income to their alma mater for ten years and then distributes the remaining assets to their children.
Charitable Trusts can be a valuable tool for individuals and families who want to support charitable causes while also receiving tax benefits. By working with an experienced estate planning attorney, donors can create a Charitable Trust that meets their specific needs and objectives.