Many people have special causes they give to over the course of their adult lives. Perhaps you want to continue that giving by making sure a Michigan charity or foundation receives some of your assets after you pass away. With the help of some smart estate planning, you can do just that through the use of a charitable trust.
A charitable trust is, like any other trust, a legally recognized entity that holds money for beneficiaries. As FindLaw points out, anyone can form a charitable trust, not just the affluent and the famous. You also have the option of deciding exactly when to gift assets to a charity. With a charitable trust, you can pass along assets while you are still alive or after you die.
If you want a charity to receive assets from you early on, you can choose to form a charitable lead trust. This kind of trust allows you to create a payment schedule to a charity. It can last for a set number of years or for simply as long as you live. Once this period has concluded, the rest of the trust assets go to beneficiaries that are not part of a charity, like your children, grandchildren, a spouse, whoever you want to benefit.
On the other hand, you may want your heirs to receive assets first before passing along anything to a charity. People with this goal in mind can opt for a charitable remainder trust, which you can use to pay out to your non-charitable beneficiaries for a specific period of time. Once the period is finished, the remainder of the assets will be paid to a designated charity.
The upside of charitable trusts is that they provide tax benefits to beneficiaries and even the person who founds the trust. The downside is that a charitable trust is irrevocable. Once you place money into the trust and the trust becomes active, you cannot take the money back. So anyone considering a charitable trust should be certain that they are making the proper choice.
Since estate planning varies from person to person, do not read this article as legal advice for your situation. It is only intended for your educational benefit.