- What Is a Charitable Trust?
- Benefits of Starting a Charitable Trust
- How Do You Qualify as a Florida Charitable Trust?
- What Are Some Types of Charitable Trusts?
- How Do I Set Up a Charitable Trust?
- Hire a Trust Law Attorney Who Understands Estate Planning
Trust law is a complex facet of estate planning. With so many options when choosing what type of trust you want to establish, you need an attorney with experience handling estate planning matters. When it comes to a charitable trust, there are many things to consider. When founding one, you can choose to continue to receive profit from the assets held in your trust while you live, or you can have profits go to the charitable organization.
At The Law Offices of Gary I. Handin, P.A., our legal team has years of experience in trust law and can provide expert advice on estate planning and wills and trusts. When you create a charitable trust, the assets are no longer a part of its taxable income, which reduces your federal tax obligations.
What Is a Charitable Trust?
A charitable trust is a trust that benefits a specific charity, foundation, or the public. Usually, these types of trusts are created as part of an estate plan to reduce or aviod the burden of gift and estate taxes.
Gift and Estate Taxes
At the time of publication, there are no gift or estate taxes in Florida. However, the federal government does impose a gift tax with rates that vary between 18% to 40% on any cash payment or gift valued over $15,000. Anything gift of $15,000 or less to any one person in any calendar year is not taxable to the person giving the gift, nor the person receiving it.
So, what does this mean in a nutshell? It means that you are free to give gifts valued less than $15,000 to as many people as you’d like without facing any taxes.
Benefits of Starting a Charitable Trust
Charitable trusts in Florida are a way to help people in need or your community. Trusts help the creator to the trust (the settlor) to direct which charities will get some of their assets. Best of all, this reduces your estate taxes. In addition to federal estate tax and gift tax benefits, some charitable trusts can also help you save on capital gains taxes and federal income taxes too.
How Do You Qualify as a Florida Charitable Trust?
Florida statute 736.0110 says that a charitable organization designated to a charitable trust can receive distributions from the trust, but it must meet the definition of a qualified beneficiary.
What Are Some Types of Charitable Trusts?
Under trust law, trusts that qualify as charitable trust status in Florida, include:
Charitable Remainder Trust (CRT)
With this trust, trust assets are paid to the charity when the settlor passes away. During their lifetime, they can sell assets and not pay capital gain taxes. The creator of the charitable trust also receives a yearly income and tax deductions for charitable gifts.
Charitable Remainder Annuity Trust (CRAT)
Like the charitable remainder trust, the settlor is paid an annual amount based on the initial value of the trust they chose.
Charitable Lead Unitrust (CLUT)
This trust pays income directly to a charity. The remainder of the money paid when the trust ends is paid to heirs. Settlors who have a lot of money and beneficiaries who don’t need the income usually choose this trust type.
Charitable Remainder Unitrust (CRUT)
With this charitable trust, the settlor is paid a fixed yearly percentage, which depends on the value of the trust assets. This is adjusted annually.
Ultimately, with remainder trusts, the donor creates the trust and names the charity as its trustee. The charity pays the donor a yearly sum and they get to spread their income tax deduction benefit over a period of five years. When they die, the charity receives the balance of the trust.
How Do I Set Up a Charitable Trust?
When you’re interested in setting up a charitable trust, schedule a consultation with our trust law attorneys. We can help you decide which option suits your needs best. Next, we will draft all necessary legal documents to ensure your trust is legally protected. There are certain tax breaks that you and your heirs or beneficiaries are granted. We can answer any of your questions regarding trust law.
Hire a Trust Law Attorney Who Understands Estate Planning
Charitable trusts are a great way for anyone who wants to support non-profit organizations to receive income and enjoy tax deductions. Working with our experienced legal team ensures that your trust will benefit you best. A good lawyer is one you can trust! To schedule a consultation at our Coral Springs law office, call The Law Offices of Gary I. Handin at 954-796-9600 today! You can also visit our legal tips blog for more information about estate planning, wills and trusts, business law, real estate law, and more.