For example, if you set up a trust and transfer $200,000.to it. Income from the trust is payable to you or your children. At the end of the trust term, the trust principle is paid to a charity of your choice. As long as you meet the Internal Revenue Code requirements, you may take an immediate income tax deduction for your donation to this "split interest" trust.

A charitable remainder trust allows you to make a gift to a charity while benefiting a non charitable beneficiary (or beneficiaries) for a period of time. The non charitable beneficiary (you may in fact, designate yourself or any other person) receives the income from the trust for a specified term. Your designated charity then receives it's interest in the property at the end of that trust term.

With a charitable remainder trust, the charitable income-tax deduction is maximized if the trust payment is lower, and the term of the trust is shorter, since the amount the charity will ultimately receive will be higher.

With a charitable lead trust , one in which the charity gets the income and someone else gets the remainder, the opposite is true: the higher the payment and the longer the term, the larger the charitable income-tax deduction.

For both charitable lead trust and charitable remainder trust, the value of the charitable organization's interest is determined by using IRS tables and formulas. The government' stables currently assume a 7% interest factor and are unisex in format.

Deductions for charitable trusts are subject to the Internal Revenue Service Code's overall limitations on deductions for charitable contributions. These limitations allow tax payers to deduct no more than set percentages of their adjusted gross incomes. Applicable limitations depend upon the type of property contributed and the identities of each donor and charity.

Your contribution to a charitable remainder or charitable lead trust receive favorable gift and or estate tax treatments. Gifts made during your lifetime entitle you to a gift tax charitable deduction, while charitable contributions made in your will may reduce the estate taxes through the estate tax charitable deduction.

Charitable gifts made in trust can be an effective way to reduce your tax burdens while satisfying your philanthropic inclinations. Gifts of sizable amounts invariably require the help of professionals.

We are here to help when it comes to setting up and administering charitable trusts. With our help, a charitable trust can be used to further both your charitable and your other planning objectives.