One of the best aspects of estate planning is that it is not just about growing your assets; it’s also about finding ways to use your assets effectively that leave a lasting positive impact on your family, your community, and society at large. Charitable remainder trusts are an estate planning instrument that combine all of these elements by enabling short- and long-term financial benefits to estate owners while providing them with a powerful vehicle to fund the private and public charities they support. Christopher B. Johnson, an estate planning attorney in Pasadena, can help you create, maintain, and update charitable remainder trusts that serve the financial needs of you and your loved ones while supporting the charitable causes close to your heart.
How Charitable Remainder Trusts Work
In a charitable remainder trust, you as the “settlor” (the person who funds the trust) transfers property to the trust, which can include cash, securities, or other property. The trust will then grow in value based on investment returns, and the trust’s investment income will be split between two streams.
The first stream of investment income, which can be between 5% and 50% of the income, will go to whomever you designate as a beneficiary, which can be you or others. The second stream of income will go to one or more charities that you designate. At the end of the term of the trust, the “remainder” (meaning whatever is left in the trust) will go to your designated charities.
The Benefits of a Charitable Remainder Trust
By creating a charitable remainder trust, you as the settlor can take advantage of the following benefits:
- Charitable Deduction: You can take a charitable deduction at the time that you fund the trust,
although you or your beneficiaries can continue to receive income from the trust. The amount of charitable deduction you can take will depend on the specifics of how the trust is created. - Tax-Free Transfers: You can transfer property that has increased in value, such as securities, into the trust without having to pay capital gains tax on the increase.
- Tax-Free Growth: As the trust’s investment income grows and is paid out, the trust will not have to pay tax on the growth nor will the beneficiaries have to pay tax on the distributions.
Finally, as stated before, charitable remainder trusts are a great way to maximize your ability to support the organizations and foundations that you support while also protecting your assets and providing income and support to loved ones as well.
Contact a Pasadena Estate Planning Attorney Today
Estate planning and probate attorney Christopher B. Johnson, located in Pasadena, California, has years of experience in all aspects of estate planning, and works with clients from all walks of life to create wills that reflect their needs and work towards bright futures. To request an immediate consultation regarding setting up a charitable remainder trust or any other aspect of estate planning, contact him today at (877) 755-9178.
Let’s make a plan