DO NOT TRUST YOUR FAMILY WITH YOUR TRUST? LEARN MORE ABOUT CHARITABLE TRUSTS

by Van Den Heuvel Law Office

It is often assumed that when a person passes away, they will leave their assets and property to their loved ones. However, this does not always happen. People often do not want to leave their family members an inheritance, or they simply do not have any family members to whom they could leave their assets. In these instances, creating a charitable trust is sometimes the best option. There is a lot to know about these types of trusts and below, our Michigan estate planning lawyer provides the information you need.

What is a Charitable Trust?

As the name implies, a charitable trust is a legal document that allows individuals to leave their assets to a charitable cause that is meaningful to them. The assets owned by an individual can be passed on to a charity either in the event of their death, or during the individual’s lifetime. Charitable trusts are generally irrevocable, meaning a person cannot make any changes to them once they are created, nor can they take back any property included in the trust.

Types of Charitable Trusts

There are two different types of charitable trusts that can help a person with estate planning. These are charitable remainder trusts and charitable lead trusts. Due to the fact that these trusts cannot typically be changed or modified, it is crucial to know the different types of trusts and what they entail.

A charitable remainder trust allows individuals to create a trust that donates certain property to a charitable cause, but allows the person to keep the income generated from it. For example, a person may donate their share of stocks to a certain charity. The charity would receive the stocks while the individual could continue to keep the income generated by them. After the individual passed away, the charity would retain the stocks, as well as any income generated from them.

In some cases, a person wants to set up a remainder trust but they want someone else to receive the income from certain property during their lifetime. In this case, a charitable remainder annuity trust must be established.

A charitable lead trust, on the other hand, allows the creator of the trust to retain the property, but the income generated from it is donated to a charitable cause for a certain amount of time. Once that period of time has expired, another beneficiary can receive the income generated from the property or it can revert back to the creator of the trust.

Our Estate Planning Lawyers in Michigan Can Help Create a Plan That is Right for You

Our Michigan estate planning lawyers at Van Den Heuvel Law Office can advise you of your options when creating an estate plan that will benefit you and help you give back to charities that are meaningful to you. Call us today or fill out our online form to schedule a consultation and to learn more about how we can help you protect your future.

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