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The purpose of a trust is to protect and hold a person’s assets for the benefit of another individual or an organization. A trust can specify how and when assets are passed onto this beneficiary. There are many different types of trusts, which are each designed for a particular purpose. One type of trust under Florida law is called a charitable trust.
The most common charitable trust is called a charitable remainder trust. When setting up a charitable remainder trust, the first step is to choose a charity to be the beneficiary. The charity must be approved by the IRS. You must then set up the trust and transfer in any assets that you want to go to that charity.
As with other trusts, there must be a trustee who holds and manages the property in the trust. In the case of a charitable trust, the charity itself serves as the trustee. The charity pays you, or a person you have named, part of the income that the trust accumulates. Depending on how you set the trust up, these payments will either last for a certain number of years or for the rest of your life. The trust will end upon your death and any property left over will be given to the charity.
Obviously, one of the benefits of a charitable trust is that you can donate generously to a charity of your choice. In exchange, you get several tax advantages. For example, you can receive an income tax deduction for your donation. Additionally, the property you gave to the charitable trust will not be included when calculating your estate tax. Lastly, you do not have to pay capital gains tax on any property that appreciates while it is in the trust.
If you are interested in setting up a charitable trust, consider speaking with an attorney who has experience in estate and trust planning. One thing to keep in mind is that charitable trusts are irrevocable. This means that it cannot be altered, modified, or revoked after it is created. As a result, it is very important that you are sure that you want to set up a charitable trust. An attorney can help you weigh the pros and cons before you make that leap.