Mixtures of Giving and Receiving Income

You may receive a large deduction now by setting up certain trusts that provide funds both to charitable organizations and to your family. The general steps for this are one, work with an attorney to create a trust. For purposes of this lecture, think of a trust as a separate entity, almost like you created a company that’s only job is to receive assets, you gave it and distribute those assets according to the directions you created for it. Those instructions are called the trust agreement. Yeah, it’s complicated. That’s why you need to work with an attorney to transfer money investments or other assets to the trust. Now the trust owns them, you don’t own them anymore, and you can’t get them back. Three. The trust distributes money over time to at least two beneficiaries, charities, these are the organizations you want to support and non charity beneficiaries. This may be your family or anyone else. Charitable Trusts are for mixtures of two sets of options. In this image, I show the two sets of options in a matrix the first option is down the left side of the matrix, you decide who gets the money first either a non charity beneficiary or the charitable organization. The second option is across the top of the matrix, you decide whether you want the amount of the periodic payments to be based on the original value of the trust or the Trust’s current value. The names of the four types of resulting trusts are in the middle of the matrix. Now let’s go into each of the four types of charitable trusts. Charitable remainder annuity trusts are crap for short, and a kratt. The non charity beneficiary gets periodic payments either for their life or for a fixed period of time. Once they die or the time period expires, whatever is left in the trust goes to the charities, the annual total of the payments must be equal to or more than 5% but less than 50% of the initial value of the trust. Charitable remainder unit trust trust are crap for sure. A credit is similar to a crap the non charity beneficiary gets a string of payments and the rest goes to the charity. In a credit though the required amounts of the payments based on the current value instead of the initial value of the trust, this means the payment amount varies from year to year. There’s more flexibility on what payments the trust can make. You also can add assets to a credit which you can’t do with a crap charitable lead trusts, clouds and clouds. Now the beneficiaries switch order from the craton crept in charitable lead trusts, the charities receive a series of payments and the non charity beneficiary receives whatever’s left. These are complicated. Why would anyone want to set one of these up, they give the donor and immediate large tax deduction and reduction of their estate for estate taxes. At the same time, these funds are kept secure in the trust to provide for two types of beneficiaries. The donor cares deeply about their family and charitable organizations they support. These trusts are usually used by wealthier donors. There are a couple of similar structures that are used with a wider variety of donors, charitable gift annuity, and a charitable gift annuity. The donor makes a donation and enters into an agreed With a charity to receive a series of payments over the life of the donor or their spouse, the charity receives the remainder of the funds when the payments and pooled Income Fund. These are set up and maintained by the charitable organization rather than the donor. Donors contribute to the pool and receive periodic payments from the pool. The difference between what’s donated to the pool and what’s paid out to the donor goes to charity. This course provides the basics of better giving. The methods of giving in this lecture have lots of detail I didn’t cover but I wanted you to be aware of these options. Talk with your investment advisor, tax advisor or estate planning attorney if you think these might be right for you.