Once upon a time, trusts were used almost exclusively by wealthy families as a way to control the family fortune as it made its way through successive generations. Not so today. Today, even the average estate plan typically includes at least one trust agreement. One common type of trust agreement in use today is a charitable remainder trust. Understanding the basics of this type of trust should help you decide if a charitable remainder trust might fit into your comprehensive estate plan.
I you are one of those people for whom philanthropy is a way of life then you undoubtedly wish to include charitable gifting in your estate plan as well. If you also have a spouse, children, or other loved ones whom you wish to provide for in your estate plan a charitable remainder trust allows you to accomplish both objectives. Like other trusts, a charitable remainder trust allows you to transfer assets into the trust to be held in trust for the benefit of a third party, or in this case parties. A Trustee will then oversee the administration of the trust. With a charitable remainder trust the terms of the trust are such that the trust assets will be used to provide for at least one non-charitable beneficiary first with the remainder of the trust assets being gifted to a charitable beneficiary.
For example, imagine that you have a child named Beth and that your favorite charity is the XYZ Charity for Animals. You establish a charitable remainder trust and transfer in $500,000 in assets to the trust. Your charitable remainder trust might be set up such that Beth receives a distribution of $25,000 each year for ten years following your death. After the last distribution to Beth, the remaining funds ($250,000 plus interest) will then be gifted to the XYZ Charity for Animals.
Along with satisfying your desire for philanthropy, including a charitable remainder trust in your estate plan also provides your estate plan with tax benefits.
If you have additional questions or concerns about charitable remainder trusts or your Texas estate plan in general, contact the experienced Texas estate planning attorneys at The Mendel Law Firm, L.P. by calling 281-759-3213 to schedule your appointment today.
Stephen A. Mendel, Estate Planning Attorney
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