The firm can also assist in drafting trusts that will provide for charity at one’s passing. While an outright bequest of either a specific dollar amount or some percentage of one’s estate is one option, provisions can also be made such that assets will be left to one or more charities but only after providing some type of income stream to one or more beneficiaries.
This is often done through a “unitrust” or “annuity trust” wherein the named beneficiary(ies) will receive a fixed income each year for a lifetime, with the balance of the trust ultimately passing to charity. The limitation is that the beneficiary must be restricted to receiving a stated percentage of the trust each year. No provision can be included for distributing additional principal. An estate tax charitable deduction is generally still available in this situation. The amount of the deduction is based upon the total amount set apart in the charitable trust, reduced by the actuarial value of the life estate given to the beneficiary.
This type of trust might be a good choice where the named beneficiary has no descendants and is not likely to have any. The donor establishing the trust can provide a fixed income stream for the beneficiary’s lifetime with the residue of the trust ultimately passing to charity.
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Do you have questions about drafting a charitable trust? Our Norwood office is ready to help. Call 781-551-5900 or send us an email to schedule a consultation.