A: No. A charitable trust is much more than just giving. A charitable trust is a complex legal entity that can help preserve your wealth and provide for the needs of your family in addition to leaving gifts to charity.
A: To qualify as a charitable trust, the benefiting party must be a charity pursuant to section 501(c)(3) of the Internal Revenue Code.
If you plan on starting and operating a charity, it is highly recommend you have an attorney help organize and operate the charity to ensure that Federal and State laws are property complied with.
Q: What happens to the principal in a charitable trust when I pass?
A: It depends of the specific type of charitable trust you establish.
The most common forms either have the income going to your established beneficiaries during your lifetime and the principal to the charity after you pass, or the income going to the charity during your lifetime and the principal to your designated beneficiaries when you pass.
In addition to the gift and estate tax savings generated by the trust itself, the cash flow created by the CRT can be coordinated with other estate planning techniques. The most common combination involves gifts of cash from you to an irrevocable trust or directly to family members who then use them to purchase life insurance. Commonly referred to as wealth replacement, the concept often enables you to provide a significant legacy to charity without disinheriting your heirs.