Many people who are developing an estate plan wish to do something altruistic, something that will help better the lot of others after their death. Setting up a gift trust is one way of answering this urge. Your Kingwood estate planning lawyer can answer any questions you have about gift trusts, and help you decide if one is appropriate for your situation. The following is a brief overview of how gift trusts work.
What Is a Gift Trust?
Otherwise known as a charitable remainder trust, or CRT, gift trusts were created by congressional order in 1969. It is not a coincidence that they came about at a time when much focus was given to improving society. In essence, a CRT allows you to gift assets that you place in the trust to a charity of your choice after you die. Charitable remainder trusts are irrevocable, which means that you cannot dissolve the trust once it is established. However, you can change the designee.
What Are Some Benefits of Charitable Remainder Trusts?
Gift trusts provide a number of distinct advantages both before and after your death. While you are still alive, income from the assets held in the trust can be used to help fund your retirement. If you do not need this income, you can designate it for a loved one. If you have a son who is not good at handling money, then, the CRT can be ideal for him. During your lifetime he will be able to enjoy benefit from the interest generated by the assets, but will not be able to touch the principal.
Another advantage of CRTs is that you will not need to pay any capital gains tax on the assets held in trust. If, then, you hold stocks that are increasing in value substantially, you or a loved one can enjoy this increase without the imposition of capital gains. It is worth noting that only interest and income can be touched, and not the principal amount.
Finally, if yours is a large estate and may be subject to federal estate tax, the assets held in trust are not included in calculating the worth of your estate. This, in turn, can potentially reduce the amount of estate tax your heirs will have to pay.
Is a Gift Trust Right for My Estate Planning Needs?
Your Kingwood estate planning lawyer will assess your situation and advise you on whether a CRT is appropriate for you. Call Peterson Law Group today to arrange a consultation at 281-609-0664 or 832-786-5062.