Dunlap & Seeger, P.A.
schedule a consultation 507-316-0628
We Know You
We work with local clients and clients throughout the country who are looking to continue to build a sense of community in Rochester.

Charitable Trusts: Important in Estate Planning Purposes


Many families and individuals are familiar with the idea of trusts. Trusts are an important tool in estate planning purposes because they can serve as a way to reduce the value of the estate before the estate tax is calculated. This can help save the heirs a significant amount of money because the estate will owe less money in the form of an estate tax.

When people are deciding what to do with their estate, their choices are to donate it to charity, pass it down to their children, or to hand it over to the government. For people who desire to donate some of their estate to charity, a charitable trust is an important potential tool.


Charitable Trusts and the Gift Tax

When people desire to donate money to charity, they should first consider donating gifts to this charity prior to their death as a way to cut down their estate. While this is a nice gesture, people should be careful not to go over the limit of the gift tax. Otherwise, they will be subject to similar penalties as the estate tax. Once people have reached their gift tax limit for the year, they can start putting more funds for that charity away in the form of a charitable trust.

Charitable Trust and the Estate Tax

There are two different kinds of charitable trusts. The first is called a lead trust. In a lead trust, the trust pays a certain amount of money to the charity every year and any money that is left over is returned to the owner of the trust. In a remainder trust, the trust pays a certain amount of money back to the owner every year and the rest goes to the charity. The major benefit of these trusts for estate planning purposes is that these trusts are typically tax-exempt up to a certain limit. When the trust pays out its benefits in the form of an annuity, these benefits are typically tax-exempt as long as they aren't paying out a certain percentage, or more, of the trust's value.

Charitable Trusts and Income Tax Deductions

In addition, these trusts pay out these benefits while the owner is still alive. These benefits are actually tax deductible because they are seen as charitable donations. Therefore, these trusts are beneficial both as an estate planning tool and as an income tax planning tool. People need to remember not to overlook these benefits during the planning stages.

When it comes to planning for an estate, trusts are an important tool that many people overlook. Please consider contacting an experienced estate planning attorney in order to make sure that as much of your estate as possible is passed down to your heirs and beneficiaries. A charitable trust is only one of the many tools that an estate has at its disposal.

No Comments

Leave a comment
Comment Information

Contact Us Today Our lawyers listen carefully to your goals and concerns while helping you obtain the best results possible. Call 507-316-0628 or fill out the form to email our team.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Dunlap & Seeger, P.A.
30 3rd Street SE
Rochester, MN 55904

Toll Free: 800-636-2689
Phone: 507-316-0628
Fax: 507-288-9342
Rochester Law Office Map