If you don’t have family or would not like to pass on all of your assets to friends or other loved ones, then one option you have is to open a charitable trust instead. A charitable trust can benefit only the charity that you select or may pass on to a charity as well as other beneficiaries.
There are two kinds of charitable trusts that you should get to know. The first is a charitable lead trust. The second is a charitable remainder trust.
Charitable lead trusts
Charitable lead trusts are unique because they allow you to pass on a portion of your assets to a charity. You’ll be able to get a tax deduction that is equal to the payments made to the charity, so this trust is used during your lifetime to obtain better tax relief.
Once you pass away, the trust pays out the remaining assets to the beneficiaries you’ve selected.
Charitable remainder trusts
Charitable remainder trusts are different because you can generate income from them for yourself. You will obtain those monthly or yearly payments until you pass away. At that time, the remaining assets in the trust will pass on to the charity of your choice. You can also qualify for a partial tax deduction during your lifetime, which is beneficial in reducing what you owe to the Internal Revenue Service over time.
Both of these options could be good choices for you. Take time to learn more about estate planning and trusts that may be able to help you reduce your taxes and more effectively pass on your assets.