On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Thursday February 27th, 2025.
Many Florida residents want to leave something meaningful for their families and for the causes they believe in. One way they can do that is through charitable trusts. A charitable trust allows you to donate to charity while securing tax benefits and managing wealth in the process. By supporting education, healthcare, or any other cause, a charitable trust ensures your generosity continues long after you’re gone.
What Is a Charitable Trust?
A charitable trust is a legal way to set aside money or assets for charity. In the process, you can keep the financial benefits for yourself or your heirs. There are two main types of charitable trusts:
- Charitable Remainder Trust (CRT): You or your chosen beneficiaries receive an income from the trust for a set period. After that, whatever remains goes to the charity of your choice.
- Charitable Lead Trust (CLT): The charity gets income from the trust first. Then, after a certain period, the remaining assets are passed to your heirs.
How Can a Charitable Trust Help With Taxes?
Charitable trusts can help reduce taxes in several ways:
- Income Tax Deduction: You can get a tax deduction when you set up the trust. The deduction is based on the amount that will eventually go to charity.
- Avoiding Capital Gains Tax: If you donate appreciated assets, like stocks or real estate, you won’t have to pay capital gains tax when they’re sold.
- Lower Estate and Gift Taxes: Assets in a charitable trust may not be counted in your taxable estate. This can reduce or even eliminate estate taxes.
- Protection from Creditors: Since the assets are held by the trust, they are generally shielded from lawsuits and financial claims.
Besides tax advantages, you can use charitable trusts to support charities for years to come. Many nonprofits rely on steady donations to plan their programs and help more people. Instead of a one-time gift, a charitable trust can provide long-term financial support for these organizations.
Make a Plan That Reflects Your Values
A charitable trust can be a great way to give back while also protecting your estate. If you want to explore your options, Wickersham & Bowers is here to help. Contact us today to get started on an estate plan that fits your goals.
