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Charitable Trusts

Charitable Trusts are irrevocable (i.e., they cannot be modified) and come in many types of packages. Often they are set-up to benefit a charity or charities a person already wishes to benefit, but do it in a manner which provides income to that person for their lifetime (and sometimes the lifetime of their spouse); an income tax deduction for the charitable gift; and, ultimately, a gift to the charity.

This is sometimes done with greatly appreciated assets (real property or stock which has increased in value from the original purchase price) which would cause a large income tax payment if liquidated by the owner. By transferring the assets to the Irrevocable Charitable Trust, a person is not selling or liquidating the assets, and thus they do not have a tax.

With an Irrevocable Charitable Trust, one does give up the income (rents, interest, dividends). However, the trust is set up to pay the person income that the person agrees on. The charity will often sell the property, but they do not have to pay a tax. The person gets a charitable tax deduction based on many factors including life expectancy, the value of the property, and the required interest payments to the person.

Often a person will use the amount of the tax savings to purchase life insurance in an amount and within an Irrevocable Life Insurance Trust, to replace the value of the asset placed in the Irrevocable Charitable Trust, as a benefit to their heirs (usually the children who now will receive the insurance proceeds in place of the asset which is now going to the charity).

A creator of the Irrevocable Charitable Trust wins by not paying income tax; the charity(ies) win(s) by receiving the gift; and the creator's family wins by receiving the life insurance, tax-free, rather than the inherited assets subject to tax.

To view a short video by Long Beach Estate Planning Attorney John T. Anderson on Irrevocable Charitable Trust and the different types of trusts prepared by The Law Office of John T. Anderson, Click Here

Contact the Law Office of John T. Anderson to schedule an appointment to discuss your estate plan and the best way to meet your charitable giving goals.

DISCLAIMER: The information contained in this website is intended to inform the reader, generally, of issues in California estate planning, trust, and probate law and is not to be the final resource, and should not be considered legal advice. The information is not intended to be all-inclusive. To obtain detailed information or advice regarding a specific legal problem, you should contact a qualified attorney in your geographic area and state. Although attorneys John T. Anderson, Lisa R. Norman, Erin M. Anderson, and John T. Anderson, Jr. (“Attorneys”) intend that this website be correct, complete, and up-to-date, they do not guarantee it to be. It is not intended to be a source of legal advice, thus the reader must seek out specific advice, from competent counsel. Attorneys do not intend links on this website to be referrals or endorsements of the linked entities. Sending e-mails to John@trustlaw.ws or other e-mail addresses associated with attorneys or staff at The Law Office of John T. Anderson does not create, and receipt does not constitute, an attorney-client relationship. No representation is made that the quality of the legal services provided by Attorneys exceeds that provided by other lawyers. To the extent that this website is deemed an “advertisement,” Attorneys advertise only in California and do not seek to represent a person based solely on that person’s visit to this website. Attorneys are licensed to practice law only in California and are willing to appear in courts only in California. Attorneys maintain one office located in Long Beach, California.

The Law Office of John T. Anderson
1741 E. Wardlow Rd., Long Beach, California 90807

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