Everyone wants to establish a legacy during their lifetime – whether it’s for their career, their generosity or their ambition. People tend to underestimate how little actions can leave a considerable impact on the world around you.
One simple way you can create a strong legacy is by establishing a charitable trust that allows you to support a cause that benefits you or people in need.
What is a charitable trust?
A charitable trust is a set of assets that an estate holder donates to a charitable organization or a specific cause. It allows someone to give back to an organization that helps others while also receiving personal benefits in the process. Some advantages include:
- Tax benefits – adults who have charitable trusts do gain tax advantages such as an income tax deduction and lower estate taxes. It may save you and your loved ones thousands of dollars in the future.
- Receive income – it is possible for you or your beneficiary to receive a profit from the trust, whether it’s a fixed amount each year or a percentage of its value.
- Diversify investments – A charitable trust also allows you to turn the property into new investments with paying a significant tax on any profits gained.
Not only are there several benefits to charitable trusts, but it is also relatively easy to customize a trust to fit your needs. For example, you can establish trust with two beneficiaries, or a “split-interest trust.”
You can also choose from a variety of causes to support – it needs to be an IRS approved charity. Then, whatever charity you choose acts as the trustee and manages the trust to produce income for you or your beneficiaries.
While the personal gain is a substantial benefit, it’s crucial to know how useful these trusts are for the charities. One of the largest charitable organization, The Bill and Melinda Gates Foundation, was founded on a charitable trust and helps millions of people by providing clean water and sustainable agriculture programs.
If you are interested in establishing a charitable trust, consider what charities or causes you would support and visit a financial institution to learn about the next steps in the process.
