When deciding how you want your estate distributed after you are gone, donating to some of your favorite charities may be one of your priorities. Through the creation of a charitable trust, you are able to leave something behind to the causes that mean the most to you. There are two different types of charitable trusts that can be set up depending on your individual needs.
A charitable trust is designed to pass designated property or assets to a charitable organization once you pass away or during your lifetime. Most of the time these trusts are irrevocable which means they cannot be changed once they are established. Besides not being allowed to make changes you also are not able to take property back included in the trust.
In addition to providing support to a cause that is important to you, a charitable trust can also provide tax savings. To learn more about setting up a charitable trust, contact Grewal Law PLLC at (888) 211-5798 today.
Types of Charitable Trusts in Michigan
There are two types of charitable trusts you can consider in your estate planning. Your individual needs will determine if a charitable remainder trust or a charitable lead trust is the best option for you. As mentioned earlier, most charitable trusts are irrevocable, so it important to take time when deciding what trust you want established.
A charitable remainder trust allows you to donate a piece of property while still keeping income generated from it. The property may include a physical asset or stocks and bonds. Once you pass away the property is then turned over to the charitable organization and any future income belongs to it.
However, there are some exceptions to the rule regarding surrendering of the income at your death. If you establish a charitable remainder annuity trust you can allow another beneficiary to receive income through the end of that individual’s lifetime or for a set period of time. If you want to provide for a spouse or another loved one choosing this option may be right for you. Similar to a charitable remainder annuity trust, a charitable remainder unit trust allows more than one transfer to be made to the trust. To learn more about the charitable remainder trust options and why you may want to establish one contact our team at Grewal Law PLLC right away.
In contrast, a charitable lead trust allows you to keep your property. Instead of donating the property when you pass away you donate the income generated from something for a set period of time. For instance, if you set up a lead trust for ten years during that timeframe the designated charitable organization will receive the income generated by the property. Once the time period has passed, you can have another beneficiary designated to receive the asset or ownership can revert back to you. By setting up a charitable lead trust you are able to reduce the tax liability of your heirs because the overall value of the property has been reduced.
Charitable Trusts & the Benefits to You
Setting up a charitable trust allows you to support an important cause while saving on income and estate taxes. Depending on the type of trust you have established there can be significant income tax savings based on the charitable donation. In addition, by having property included in the charitable trust the overall estate tax liability your heirs could face will be reduced.
Ready to Help You with Your Estate Planning
The Michigan estate planning lawyers at Grewal Law PLLC are ready to help you make decisions regarding the creation of a charitable trust. We also know all the federal tax ramifications a trust will have on you and your heirs. The administration of a trust can be complicated and we can handle all the paperwork needed to get one established for you.
Our attorneys serve all of Michigan, including Grand Rapids, Lansing, East Lansing, and Okemos. Grewal Law PLLC is ready to get your charitable trust started. Call us today for a no obligation quote at (888) 211-5798.