If you receive great pleasure from giving back to your Illinois community, you may wish to consider setting up one or more charitable trusts to allow you to donate on a more structured basis. Charitable trusts can form the cornerstones of well thought out estate plans and can benefit you as much as they benefit the charities you choose.
Keep in mind that just because you set up a charitable trust does not mean that its beneficiary must be an actual charity. It can benefit your church, your alma mater, a museum, an animal shelter, a hospital, a dance company, etc., as well as a recognized charitable organization such as one doing ongoing cancer research, providing food or shelter to the disadvantaged, etc. You designate this entity as your trust’s charitable beneficiary. However, you can also designate one or more noncharitable beneficiaries as well, including yourself.
You have great flexibility and can receive many benefits by setting up a charitable trust, such as the following:
- You get to choose which type of charitable trust you want to establish: a charitable lead trust or a charitable remainder trust.
- You get to choose how long the trust remains in existence.
- You get to choose how and when the trust assets will be distributed.
- You get to maintain control over the trust assets if you designate yourself as the trustee.
- You could receive major tax benefits.
Lead versus remainder trusts
A charitable lead trust benefits your designated charitable beneficiary more or less immediately. Each year it receives the income produced by the trust assets. Once the trust period ends, you and/or your other noncharitable beneficiaries receive the assets themselves.
A charitable remainder trust benefits your designated charitable beneficiary in the future by working exactly opposite to the way in which a charitable lead trust works. Here you and/or your other noncharitable beneficiaries receive the income produced by the trust assets each year. At the end of the trust period, your charitable beneficiary receives the assets themselves.
Regardless of which type of charitable trust you choose to establish, you receive the immediate satisfaction of knowing that you are not only giving back, but also doing it exactly as you wish to do it.