Many people who support charities in America like the idea of receiving benefits in return for their giving. This way, both families and charities receive the benefits they need.

Some charitable trusts can be designed to pay an income to a donor and/or their families, and then fund the donor’s favorite charities at a later date. Other charitable trusts may be designed to pay an income for a term of years to charities, then pass the donor’s estate to family members free of estate taxes.

Here are the two basic types of charitable trusts: Remainder Trusts and Lead Trusts.

Charitable Remainder Trusts

Charitable Remainder Trusts are trusts created by a donor who irrevocably transfers property to a special trust. The donor may avoid capital gains taxes on the property transferred to the trust, and also receives an additional charitable tax deduction. Then, after property placed in the trust is invested, the trustee makes payments to the donor from the value of the trust.

Payments can be made for the lifetime of the donor, a term of years or both, and can be made to more than one person. After the income period is over, any remaining assets (including any interest or gains generated from the assets) are used to strengthen the mission of one or several charitable organizations. The assets going to the charity also avoid Federal Estate Taxes.

In order to create a Charitable Remainder Trust, American Bible Society can, in many cases, provide a free sample trust document, which can be finalized by the donor and his or her attorney.

Charitable Lead Trusts

Rather than paying income to the donor or family, a Charitable Lead Trust pays income from a significant estate to the donor’s favorite charities. After the term of the trust, the remaining property in the trust may revert to the donor’s heirs or beneficiaries free of Federal Estate Taxes.

So, what are the benefits of setting up a charitable trust? Well, apart from the heart-warming spirit of giving, it’s a win-win for both the charity and the donor. Why? Simply put: because the charity is able to further its mission, and the donor has access to increased income and otherwise unavailable tax breaks, including a charitable income tax deduction and estate tax savings. The donor is usually also able to bypass capital gains tax and avoid the cost of probate.

At American Bible Society, our highly-qualified and experienced staff of Regional Advisors can help you with your charitable estate planning needs, such as showing you how a charitable trust may give you and your favorite charities the benefits needed for the days ahead. As they visit with friends and supporters of our ministry, they like to emphasize five elements (the five “P’s”) that can reinforce your estate plan:

• Pray for your future and the future of your loved ones
• Consider people, including family, friends and ministries you may want to support
• Consider your property, or what you own
• Make plans based on your unique situation
• Consult with planners, or professional advisors that can help you execute your plan

If you are in the process of updating or creating your estate plan, and a life income plan like a charitable trust makes sense for you, please visit our ” Contact Us” page. One of our Regional Advisors would be glad to connect with you. Our services are always free.