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Charitable trusts long have been an important part of estate planning. With trusts the benefit of owning securities or other assets can be split into two parts, present and future:

  • One or more income beneficiaries can be given the immediate benefit of ownership in the form of periodic payments from the trust. These income payments can last for a specified number of years or for a beneficiary’s lifetime.
  • One or more “remainder beneficiaries” can receive the income-producing assets in the future, when the required income payments have been completed. 

Both the right to receive trust income and the right to receive a trust’s “remainder interest” can be valued for the purpose of granting income tax deductions, and also for the purpose of figuring gift or estate tax.

There are many possible variations of charitable trusts, each with important income, gift, estate and generation-skipping transfer tax consequences. The key to using today’s charitable trusts successfully is to design an approach tailored to your own particular set of charitable intentions and family financial planning objectives.