A charity trust is an essential component of any philanthropist’s estate planning for wealth transfer.
Most wealthy people may be reluctant to leave large sums of money to their children for fear of spoiling them. Therefore most of them prefer leaving enough cash for them to survive but not luxury lifestyle, thus contribute part of their wealth to charity for those in needed.
A charitable trust is a collection of assets or cash that a donor gives to a trustee in order to establish a charitable foundation. These assets are held and managed for a set period of time by the chosen “charity council committee,” with the principal or all interest generated going to the charity.
Giving to charity allows you to have an impact on the world around you, and a charitable trust can provide continuity sponsors to any chosen non-profit organization after you pass on. It’s also one way to express your intentions to serve the community.
For those who want to donate a portion of their wealth to charity, establishing a charitable trust can provide numerous tax advantages and financial benefits. By transferring these assets to a charitable trust, you can avoid paying capital gains tax on real estate or inheritance tax when you pass on.