Pittsburgh Charitable Trust Attorney

Elderly woman planning a charitable trust for her family

Creating a charitable trust can effectively protect your assets and contribute to a cause you care about. When part of a comprehensive estate plan, these tools allow estate planners to avoid probate, minimize their tax liability, and contribute to the charity or charities of their choice.

Discuss Your Estate Plan with a Pittsburgh Charitable Trust Attorney

The experienced estate planning attorneys at Jones Gregg Creehan Gerace have an in-depth understanding of Pennsylvania’s charitable trust laws. If you are interested in setting up a charitable trust or have questions, we are here to help. Our firm represents clients in various legal matters, including estate planning. Please contact the Pittsburgh trust attorneys at Jones Gregg Creehan Gerace to schedule an initial consultation.

Providing for Your Favorite Charitable Organization with a Charitable Trust 

There are many different ways charitable estate planning can be carried out in Pennsylvania. An estate planner can designate a charitable organization as the beneficiary of his assets in his or her last will and testament. Lifetime gifts are also an option. Some estate planners name a charitable organization as the beneficiary of their life insurance policies. All these tools can be beneficial, but one of the most advantageous options for charitable giving is creating a charitable trust.

How Does a Charitable Trust Work?

A charitable trust is a specific type of trust created as part of a person’s estate plan. An estate planner can set up a charitable trust by signing a trust agreement. The person creating the trust is called the grantor or settlor. As the grantor, you can appoint one or more trustees to manage the assets in the trust for the benefit of the beneficiaries. You will need to decide which charity or charities you would like to benefit from the assets in the trust after you pass away. Once the trust has been created, you will need to transfer assets into the trust. 

At that point, the trust will be the legal owner of the assets. Depending on the type of charitable trust, the assets in the trust will either go to the trust’s beneficiaries, such as the donor’s heirs, or to the selected charity. Ideal assets to transfer into a trust include appreciated assets that have low returns and have been held for more than a year. When you transfer these assets into the trust, the income tax deduction will be based on the asset’s higher fair market value instead of the initial cost.

The Benefits of Charitable Trusts

Creating a charitable trust allows you, your loved ones, and the charity of your choice to avoid going through the probate process. While it is an option to donate money to a charity of your choice and receive an income tax deduction, this may not be the most strategic option. Creating a charitable trust can be a more cost-efficient way to donate to your favorite charity while providing you or your loved ones with a steady income. It can also help you reduce your taxable income now and avoid capital gains taxes later. Additionally, charitable trusts are considered revocable trusts. You cannot revoke the trust or take back the assets you’ve transferred into the trust except under extraordinary circumstances. As a result, the assets will be protected from creditors. 

Is Creating One Right for Me?

The best way to determine whether a charitable trust is right for you is to discuss your needs and goals with an experienced attorney. Many benefits come with creating one, but these types of trust can be complicated. A charitable lead trust is not taxed exempt. The IRS will likely treat it as a private foundation unless it meets specific legal requirements. 

As a result, charitable trusts are usually most valuable for high-income estate planners who want to positively impact the world with their assets while making extra income and minimizing taxes. Working with an attorney is important because the trust agreement needs to comply with state law to be legally valid and effective.

Charitable Lead Trust

There are two main types of charitable trusts: charitable remainder and lead. In a charitable lead trust, the donor controls the assets transferred into the trust. In a charitable remainder trust, portions of the assets in the trust will be distributed to the charity or charities over time. After a specified time frame passes, any remaining assets in the trust will be distributed to the beneficiaries of the deceased. In many cases, the assets will be distributed in a tax-free manner or with significant tax savings.

Proceeds from earned interest or gains will be split between the charity and the donor’s beneficiaries or go entirely to the charity. When the trust expires, the charity will not control the donation. Instead, the assets will be distributed to the donor’s heirs or beneficiaries.

Charitable Remainder Trust

In a charitable remainder trust, a portion of the trust creator’s income will be distributed back to him or her or the beneficiary of the trust. When the individual passes away, any remaining assets in the trust will be distributed to the charity or charities of the individual’s choice. Setting up a charitable remainder trust allows you to continue receiving disbursements from the assets within the trust during your lifetime. Alternatively, you can allow beneficiaries you choose to receive disbursements from the trust assets. When you pass away, all the remaining assets in the trust will be distributed to your charity.

Schedule a Consultation with a Knowledgeable Estate Planning Attorney

Setting up a charitable trust comes with many different benefits. If you consider setting up a charitable or any type of trust, you will benefit from working with a skilled attorney. The estate planning attorneys at Jones Gregg Creehan Gerace have extensive experience setting up comprehensive trusts that comply with all relevant state and local laws to benefit our clients. Contact Jones Gregg Creehan Gerace to learn more about how we can help you give to your favorite charity or charity in a way that will provide your loved ones with financial security.