Finding a profitable way to give means ensuring your ability to give. By using charitable trusts when estate planning in Arizona, you can provide and generate an income simultaneously. Diversifying how you give enables you to impact the world without losing money. If giving to charity is part of your estate plan, consider which trust you’ll need.
Giving that earns an income
The charitable remainder trust (CRT) is used by estate owners who need to diversify their giving. Through a charitable remainder trust using its proceeds for charity, this trust can simultaneously release an income stream to a person named. Via monthly, quarterly or annual schedules, more than 50 percent of a CRT’s value can be withdrawn as income. Keep in mind that every trust has a trustee; this person manages how a trust’s assets are distributed.
Deadlines and benefits
The money set aside as an income stream has a time limit in a CRT trust. You decide on the payment cycle, but 20 years is the maximum. Whether for you or an heir, the person receiving those assets in a CRT obtains a default method of giving. The money is withdrawn as income is capped, so what remains is what goes to charity. Apart from future giving, your estate plan can use a charitable remainder trust to aid you in the following:
• Retirement
• Estate planning
• Tax management
Charitable trust options
As you plan to structure the administration of your estate, you have these CRT options:
• Charitable remainder annuity trusts: This releases annuity payments yearly but can’t receive more contributions.
• Charitable remainder unitrusts: You get a percentage of this trust’s balance and the ability to add additional funds into it.
Estate planning in Arizona
Keep beneficiaries in mind as you manage charitable giving. A portion of the assets in a charitable remainder trust must be released to someone. As its name implies, the remaining funds in this trust are reserved for later charity.