Some people support charitable causes, and they may decide that they want to provide a final bit of financial support once they die. This can be done through a charitable trust, but you’ll have to decide what type of charitable trust to use if you want to do this.
Charitable trusts provide a way to create financial support for your chosen charity and your beneficiaries. If you’re considering adding a charitable trust to your estate plan, it helps to understand the two main types: charitable remainder trusts and charitable lead trusts.
Charitable remainder trust
A charitable remainder trust allows you or your beneficiaries to receive income from the trust while you’re alive or for a specific number of years. Once you or the beneficiaries die or the set number of years elapses, the remainder of the trust goes to the charity or charities named in the trust.
Charitable lead trust
A charitable lead trust is the exact opposite. It provides income to the charity for a specific amount of time. This can be for your lifetime or for a certain number of years. Once that time passes, the assets that remain in the trust are passed to the beneficiaries you name.
Both of these options have specific purposes that are suitable for certain situations. If you’re considering a charitable trust for your estate plan, it may be beneficial to work with someone who can assist you with understanding each type and determining which best suits your needs. A charitable trust is only one part of a comprehensive estate plan, so be sure to consider each component necessary to make your wishes clear.