Whether it is a museum, the Red Cross, a hospital or a person's "alma mater," many people in Maryland decide to create a charitable remainder trust as a way to donate to their chosen charity. Doing so may not only provide the creator with a glowing sense of altruism, but it can also be profitable to them financially.
Simply put, a charitable remainder trust is one in which the creator of the trust puts all the assets they wish to donate to the charity in the trust at once. The charity itself is the trustee of the trust, meaning it manages the funds placed in the trust, including making investments. Of the income that is built up in the trust fund, the creator of the trust will receive certain payments. Once the creator of the trust passes away, the assets in the trust will be passed on to the charity itself.
Happily, there are tax benefits that one receives when creating such a trust. Depending on the situation, the creator could avoid the capital gains tax and see an income tax deduction, as well as avoid the estate tax. Working with anestate administration legal professional is one way a person can ensure they are getting all the tax benefits possible through their charitable remainder trust.
As this shows, charitable remainder trusts can be one way for a person to pass money to their charity of choice after their death. This is not the only type of estate-planning vehicle, however. Other types of revocable and irrevocable trusts can also be considered, as can a simple will. Each of these has different tax consequences, as well as probate consequences. In the end, there are many different considerations that need to be made when one decides how they want to hand down their property to their heirs and beneficiaries.