Are there benefits to gifting assets during the estate planning process?

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Thinking about the future can be scary and uncomfortable for many, as uncertainties lie ahead. However, planning for what will happen after you pass is essential to care for and support your loved ones. If you’ve considered gifting assets to your beneficiaries and charities, knowing what option is best for you is vital. Though it can be overwhelming, enlisting the help of a PA trusts attorney to help you set up a charitable trust is in your best interest. Keep reading to learn more about this process.

What is a charitable trust?

A charitable trust differs from a traditional personal trust in that the assets set aside will go to a specific cause. Though most all trusts have beneficiaries that will receive assets from the fund, a charitable trust must serve a charitable purpose and benefit the community. Many people set up charitable trusts as a means of giving back to an organization they hold close to their hearts.

There are two main kinds of charitable trusts – lead and remainder trusts. A charitable lead trust pays funds to a charity of your choosing over a period of time. Once this time has elapsed, the remainder of the assets will go to your beneficiaries.

A charitable remainder trust works in the opposite manner. Once created, the assets will go to the creator or beneficiaries. Upon the creator’s death, the remaining assets will go to the designated charity.

What are the benefits of gifting assets?

There are many assets to gifting assets through a charitable trust. For starters, you are able to give back to organizations that you hold near and dear. Similarly, you are able to take care of your beneficiaries while alive and after you pass.

However, opting to place assets in a charitable trust as opposed to a will comes with additional benefits. For starters, you are able to avoid capital gains taxes, as these trusts help prevent your assets from depreciating. Similarly, you will avoid the tax implications associated with gifting funds and assets. This is because funds held in a trust do not incur the annual gift tax unless you gift more than the threshold, which is $17,000 or $34,000 for married couples. This means you can give funds to charities without worrying about tax deductions withholding the entire amount of funds from the organization of your choosing.

When you’re ready to create a charitable trust, ensuring you have a competent attorney to help is essential to protecting the funds you wish to gift. At Friedman Schuman, our experienced legal team can guide you through the process of setting up the best estate plan for your needs. Contact us today to learn more about how we can help you through this process.

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