Seven Steps to Creating a Charitable Remainder Trust

For some families, charitable donations are an important part of their estate planning. The motivation behind these donations may be altruism, tax driven, or some combination of both. Regardless of your motivation, a charitable remainder trust can be utilized if you want to make significant donations of property to a charity. An added bonus is that it may entitle you to significant tax breaks.

Create a Charitable Remainder Trust by Following These Steps

After careful consultation with your attorney, if you decide that a charitable remainder trust is right for your family, you can create the trust by following the below general steps:

  1. First, you must create the charitable remainder trust with the guidance and oversight of an experienced legal professional.
  2. You should also confirm that the IRS approves of your chosen charity.
  3. Next, you must transfer the assets that you want to go to the charity to the trust.
  4. Appoint the charity as trustee of the trust. The charity will be in charge of managing or investing the property.
  5. Include a provision in the trust that outlines who is to receive the income from the trust property. This can be yourself or another individual.
  6. Decide whether you—or the other individual that you have named—will receive this income for a pre-determined number of years, or if the income payments will be for life.
  7. At your death or at the end of the period that you have chosen, the property will go to the charity that you selected.

Charitable remainder trusts should not be entered into lightly. Once property is transferred to the trust, it cannot be taken back. This is because these trusts are irrevocable. For further guidance as to whether this type of trust is right for your family, we encourage you to call our toll free number at 714-459-5481.

 

James F. Roberts
Founder and owner of the Law Office of James F. Roberts and Associates, a premiere estate planning law firm