What is the Best Trust to Set Up for Charitable Giving?
According to data from Giving USA, Americans gave more than $550 billion to charitable organizations in 2023 alone. If you are considering leaving money or property to support a good cause, you may be interested in setting up a trust. This raises an important question: What is the best trust for charitable giving? The answer depends, in part, on your specific situation and your financial needs/goals. In this article, our New Jersey charitable giving attorney explains the key things to know about your options for setting up a charitable trust.
You Have Two Main Options for Charitable Trusts in New Jersey
If you are considering putting a charitable trust in place, it is important to know that there are two main structures that you can use to do so. The types of trusts used for this purpose are Charitable Lead Trusts (CLTs) and Charitable Remainder Trusts (CRTs). They each have their own advantages and disadvantages. Here is an overview:
- Charitable Lead Trust: A CLT is structured so that the charity receives income from the trust first—typically for a specified term of years or for the rest of the donor’s lifetime. Once that term ends, the remaining trust assets go to non-charitable beneficiaries. CLTs are a good choice for individuals who want to immediately support a charitable organization while reducing the size of their taxable estate.
- Charitable Remainder Trust: In contrast, a CRT works in reverse. The donor (or another non-charitable beneficiary) receives income from the trust for a term of years or for life. After that period ends, the remainder of the trust is distributed to a designated charity. A CRT could be ideal for a donor who wants to retain income from their assets during their lifetime but still make a substantial charitable gift upon death.
Your Needs and Goals Will Help Determine the Best Charitable Trust
It would be a mistake to say that a CRT is better than a CLT or vice versa. It always depends on the specific situation. Here are some questions to ask yourself when deciding on the type of trust:
- Do you want to give now or later? Remember, CLTs benefit the charity first; CRTs benefit the donor first.
- Are you seeking income during retirement? CRTs can provide a steady income stream. A CRT is not the right option if you do not need income.
- Is minimizing estate taxes a priority? CLTs can help reduce the value of a taxable estate.
- Do you have highly appreciated assets? CRTs can help you avoid immediate capital gains taxes when selling those assets.
The Bottom Line: The best trust for charitable giving depends on your goals, financial needs, and your overall estate planning objectives. You do not have to answer this question alone. A top-tier New Jersey estate planning attorney can help.
Contact Our New Jersey Estate Planning Lawyer for Charitable Giving Today
At Poulos LoPiccolo PC, our New Jersey estate planning attorney has the skills and experience to handle all types of charitable giving issues. If you have any questions about the best trust to set up for charitable giving, please do not hesitate to contact us today for a fully confidential consultation. With an office in Monmouth County, we provide estate planning services across New Jersey.
Source:
givingusa.org/giving-usa-u-s-charitable-giving-totaled-557-16-billion-in-2023/
