Define: Charitable Trust

A charitable trust is a legal entity created to hold and manage assets for the purpose of benefiting a specific charitable cause or organisation.

While both types of trusts involve the management of assets, a charitable trust is specifically designed to benefit charitable causes, whereas a regular trust can have any purpose or beneficiary.

Creating a charitable trust allows individuals to support causes they are passionate about, receive potential tax benefits, and leave a lasting legacy.

To create a charitable trust, you need to consult with an attorney who specializes in trust law. They will guide you through the process of drafting the trust document and ensuring it complies with all legal requirements.

In most cases, once a charitable trust is established, the beneficiaries cannot be changed. However, it is possible to include provisions in the trust document that allow for the addition or removal of specific charitable organisations.

Contributions made to a charitable trust are generally tax-deductible, which can result in significant tax savings for the donor. Additionally, assets held within the trust can grow tax-free, allowing for greater charitable impact.

In general, charitable trusts can benefit any qualified charitable organisation recognized by the IRS. However, it is important to ensure that the chosen organisation meets the legal requirements for charitable status.

In certain circumstances, it may be possible to dissolve a charitable trust. However, this typically requires court approval and a valid reason for termination, such as the organisation no longer existing or the charitable purpose becoming impossible to fulfill.

Yes, it is possible to name yourself as a trustee of a charitable trust. However, it is important to consider the fiduciary responsibilities that come with this role and ensure that you have the necessary expertise to effectively manage the trust’s assets.