For many people, charitable giving is one of the top priorities when determining how their assets should be distributed at the end of their lives. Multiple options are available, but many people opt for a charitable lead trust in Covina.
A charitable lead trust allows you to fund a charity of your choice while you are alive, then provide for your loved ones after your passing. This option can help you meet multiple goals and ensure your final wishes are followed. Our dedicated trusts attorneys could answer your questions and help you determine the best path forward.
Understanding Charitable Lead Trusts
A charitable lead trust is one of the most popular ways for a person making an estate plan to provide for their loved ones and also the causes they care about. This type of trust allows a person to transfer assets likely to earn income over time. The income it generates each year is paid out as a gift to a specific charity as beneficiary.
These payments could last for years or even decades, depending on a person’s life expectancy. Once the creator passes away, the remaining assets of the trust are transferred to named beneficiaries—usually family members.
Considering the Benefits
There are several benefits for Covina residents when it comes to creating charitable lead trusts. Many people pursue this option primarily for taxation purposes. The money given to these causes is typically tax deductible, which can greatly reduce a person’s income tax bill.
These contributions can also make the difference between paying an estate tax or not for large estates. The estate tax is an obligation paid after a person’s death on money inherited by their heirs, but it only applies at the highest levels. Reducing the size of the estate can help avoid paying these taxes at all.
Not all benefits are financial. This type of trust also allows people to continue making a positive difference in their community after they are gone. They can support non-profit entities for years while building a personal or family legacy that will last for generations.
Other Types of Charitable Trusts
The lead trust is not the only option available to someone who hopes to provide for their favorite cause. Another common approach is the charitable remainder trust. This option differs because any property or assets transferred to the trust can be sold or liquidated.
The creator of the trust can live off of a portion of this money during the rest of their life. After they pass away, anything left over—the remainder—is transferred to the designated charity. The right approach depends entirely on the trust creator’s final wishes. Thankfully, an attorney in Covina could help weigh the benefits and drawbacks of charitable lead trusts.
Talk to a Lawyer in Covina About Charitable Lead Trusts
If you are thinking about creating an estate plan that provides for your loved ones while supporting a cause you care about, this option might be right for you.
Charitable lead trusts in Covina also have substantial tax benefits that could make it the best approach. Before you act, consider discussing your options during a private consultation with a dedicated estate planning attorney.
