A charitable trust is an irrevocable trust established for charitable purposes. In addition to providing a lasting gift to The Chicago Lighthouse, charitable trusts allow you to reduce estate taxes, decrease or eliminate capital gains, and obtain income tax deductions. There are two main types of charitable trusts: charitable lead trusts and charitable remainder trusts.
Charitable Lead Trusts
A charitable lead trust is an irrevocable trust to which you transfer property. Thereafter, the trust makes annual payments for a specific period of time to a charity such as The Lighthouse. After the specified period of time has passed, the balance of the trust assets pass to non-charitable beneficiaries, such as your children or grandchildren.
Establishing a charitable lead trust can help you fulfill your philanthropic goals in your lifetime while providing for your children or grandchildren for their future. It may also be advantageous if you wish you delay a beneficiary’s inheritance until a more appropriate time.
Charitable Remainder Trusts
A charitable remainder trust is an irrevocable trust that pays you income annually for a term of years and then passes to The Lighthouse upon your death. A charitable remainder trust allows you to set aside a portion of your assets as a gift to The Lighthouse while you maintain your present and future income.
This type of trust is a great way for you to:
- Increase the cash flow from appreciated assets
- Bypass an onerous capital gains tax that would otherwise be due upon the sale of appreciated securities
- Generate an income tax deduction for you in the year the trust is established
- Save estate taxes and probate costs
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