In their estate planning process, and in seeking financial advice, some people choose to make large gifts to charity, which is a wonderful thing. Another wonderful thing would be to make these large gifts to charity while also getting considerable tax benefits. A great way to do this is to create a charitable trust. In this article, I will briefly define what a charitable trust is and how it works.
There are four main things to know when considering a charitable trust. Charitable trusts can be started while you are still alive, only charities that are tax exempt qualify, you get a break on your income taxes, and charitable trusts are irreversible.
Starting a charitable trust when you are alive can give you the most tax advantages. A charitable trust can not only make a gift to a charity, but create some form of income to you or a person that you choose. Always confirm estate planning decisions and get your financial advice from your financial consultant.
The charity that you choose for your trust must be a tax exempt charity. This means that they are exempt under the IRS section 501(c)(3). There are many, many charities that qualify under this section. If you are not sure whether your chosen charity qualifies, contact the IRS to see if it is on the public charities list.
However much the value of the gift you are giving to the charity is deductible from your income taxes. This is important financial advice that could help you determine the amount of gift you wish to leave to the charity.
A very important thing to remember when deciding on creating a charitable trust is that it will be irreversible. This means you cannot take back anything you have left to the charity in the trust. So be absolutely sure and get financial advice from a professional before you make any final decisions.
Ian Filippini, the current president of Filippini Financial Group, Inc., has authored and written a number of articles relating to real estate, insurance, tax, asset protection, financial advice, and estate planning. Filippini Financial Group, Inc. and Ian Filippini have spent many years using their unique expertise and hands on approach to provide value to hundreds of retirees and pre-retirees in many areas of wealth management.
Filippini Financial Group, Inc. created, founded and run by Ian Filippini’s late father Alfred Filippini. Filippini Financial Group, Inc. is still located in the heart of Santa Barbara on Coast Village Road in Montecito, California. Ian Filippini’s mother, Deborah Filippini, and brother, Alex Filippini, moved to the Montecito and Santa Barbara area.
No advice is given or intended. This article is not to be considered legal advice. Ian Filippini is not an attorney. Filippini Financial Group, Inc. is not a law firm.