Charitable Trusts – Taking Back From Your Good Deed
There are many types of charitable trusts but the most common is the charitable remainder trust.
This works by, first, setting up a trust. Then, you will transfer this trust to your property that you want to donate to a charity. This charity must have been approved by the IRS, meaning, they are exempted to pay taxes under the Internal Revenue Code.
After that, your chosen charity will serve as a trust’s trustee. They will manage or invest to your property so it can produce more income for you. The charity will also be responsible for paying you or someone you permitted with a percentage of the income generated by the property. The payment can be received for a specific span of time or for a lifetime, depending on the agreement. Then, upon your death or at the end of your agreed period, the property will go to the charity.
Why Choose to Set Up Charitable Trusts?
You will give up your property-so why would you do that? There are many reasons and one of these, for sure, is to help others. But other than feeling good about what you do, there are still other advantages and benefits you can gain from setting up charitable trusts.
– Special Legal Privileges
The most common privilege you can gain from setting up charitable trusts are tax exemptions. Charities as well as those who donate to charities are exempted to certain taxes since the purpose of their existence is to help and not to generate income for personal benefits.
– Follow of the Cy Pres Doctrine
“Cy Pres” is a French phrase meaning “as close as possible.” This doctrine is also applied on charitable trusts. This happens when the private trust failed and its failure resulted to creation of trust for the state of the settler or himself. The properly will then be given to a charitable purpose as close as possible to the private trust.
Perpetuity rule applies on charitable trusts. The validity may last for infinity.
– More relaxed court approach
Different General Public Benefits
To be considered as a charitable trust, this should benefit the public in one way or another. It can benefit to alleviate poverty by providing the basic human needs like clothing, shelter and food. Help for the advancement of education can also be considered in these trusts. Another public benefit can be for the advancement of religion. Benefit for the general public can also be ensured by having charitable trusts for:
– sick and the disabled
– promotion of the police, armed forces, and other services for emergency
– local authority
– politics and political activity
– social advancement
– sporting support
– recreational advancement
Doing good, whether through having a charitable trust or not, will certainly bring something in return for you. If you have more property or more money for charitable trusts, then why not share it? You can also gain from it-whether directly or indirectly.