Creating an estate plan is an opportunity to bring together numerous different goals and objectives in one comprehensive plan. Though your Last Will and Testament will undoubtedly serve as the foundation of your plan, you will likely include a number of additional documents, tools, and strategies in your overall plan. One common addition to an estate plan is a trust. In fact, many people include more than one trust in their estate plan. In St. Louis and throughout Missouri, if you wish to make a charitable gift in your estate plan and you have a non-charitable beneficiary whom you wish to provide for, a charitable remainder trust may be right for your estate plan.
With a charitable remainder trust in St. Louis you have the ability to provide for a family member or loved one for a specified period of time, or for life, and then make a charitable contribution to charity at the end of the specified time period or upon the death of the non-charitable beneficiary. For example, let’s say that you put $1 million into a charitable remainder trust and named your two young adult children as the non-charitable beneficiaries. Under the terms of the trust, each of your children will receive 2.5 percent of the trust principal, or $25,000 per beneficiary, each year for ten years after your death. Therefore, collectively your children will receive $50,000 per year for ten years totaling $500,000. At the end of the ten year period the remaining assets in the trust will be gifted to The American Red Cross and your church in equal shares.
You can also set up the trust to provide for a loved one for the beneficiary’s lifetime with any funds left in the trust gifted to charity. For instance, assume the same $1 million was transferred into the trust and you named your spouse as the non-charitable beneficiary. At the time of creation of the trust you are both 50 years old. The terms of the trust call for a disbursement of 2.5 percent of the trust principal to your spouse every year for life. Assuming the trust assets are well managed, meaning the trust principal grows, your spouse could live to be 100 and the trust will still have sufficient funds to make the yearly disbursement. Upon the death of your spouse, however, all funds left in the trust will be gifted to the charity of your choice.
Creating an irrevocable charitable remainder trust in St. Louis is an excellent way to provide for loved ones and continue your philanthropic gifting in your estate plan. Talk to your St. Louis estate planning attorney if you have specific questions.
- The Magic of Grantor Trusts - November 1, 2023
- IRS Confirms Grantor Trust Status Alone Does Not Cause a Step-Up in Basis - October 26, 2023
- Understanding the Importance of the Simultaneous Death Act - October 19, 2023