Nonprofits and charitable organizations in Illinois often rely upon donations to ensure their survival. While you are estate planning, you can create a charitable trust to assist the group that you currently support or would like to donate to in the future. In addition to satisfying your need for philanthropy, creating a charitable trust can also provide you with plenty of financial benefits.
According to the Illinois Attorney General, there are specific steps that need to be taken in order to create a charitable trust. The proper documents need to be filed, for starters, stating the trustee as well as the type of charitable trust you are creating. These records, registrations and fees must be kept up to date to maintain proper status.
Once you have established the trust, you can give in a tax-efficient manner. Based on the type of trust being used, you may be eligible to receive a partial tax deduction or an upfront charitable tax deduction in the first year.
You can preserve the value of appreciating assets by selling a property that is held within the trust under its tax-exempt status. This helps you retain the trust property’s value without taking a hit by the substantial tax amounts often associated with large capital gains.
A charitable trust can also help you reduce gift taxes since deductions that you are eligible for may be based on contributions that you have made. While the type of trust can be a large determining factor in whether this is the case, a professional can help you structure the trust in such a way as to have the most beneficial impact regarding transfer taxes on the funds going to the final beneficiary.
This post is meant to be informative only and should not be used in place of professional legal counsel.