For some people, an important part of estate planning is providing for the charities and non-profit entities they feel strongly about. The law offers a number of tools to meet this goal, including a charitable lead trust.
A dedicated trust attorney from Veliz & Associates, P.A. can answer your questions about everything involved with charitable lead trust in Coral Gables. If this option is right for you, an attorney could assist with everything from identifying appropriate beneficiaries to deciding what assets to use to fund the trust.
This option is ideal for parties with extra resources that they do not need to use elsewhere. The person creating the CLT—the settlor—can use these tools to provide one or more charities with financial support for years before ultimately using the remainder of their assets for family members or other beneficiaries.
The first step in setting up a charitable lead trust in Coral Gables is funding. The settlor transfers certain assets, including bank accounts or real estate, directly to the trust. What happens with this property moving forward depends entirely on the terms of the trust.
Once funding is completed, the regular payments, known as annuities, are made to the charities named as beneficiaries. Outside of these transfers—which are often the interest earned by the assets held in trust—the property remains untouched.
In addition to naming a charitable organization to receive these annuities, CLTs also name beneficiaries for what is left over. At some point, an event will trigger the termination of the trust, which could be a specific date or the death of the settlor.
At this point, the annuity payments end, and all remaining property is transferred to the named beneficiaries, who are usually the settlor’s loved ones. Charitable trusts are irrevocable in nature, meaning that once they are created, it is generally difficult to transfer or terminate them.
Many consider a charitable lead trust to be the inverse of charitable remainder trusts. The difference is that remainder trusts provide the family member beneficiaries with the annuity payments, with a charity ultimately receiving the remainder of the property after a specific event or date.
There are two subcategories for this type of trust. They include charitable lead annuity trusts (CLAT) and charitable lead unitrusts (CLUT). Both options follow the general pattern of providing for a charity before ultimately transferring assets to the final beneficiary.
The type of trust chosen has a significant impact on the amount of each payment made to the charitable beneficiary. With a CLAT, the payments come in the form of fixed annuities. A dollar value is placed on the trust when it is created, and the same monthly payment is made for the exact amount.
CLUTs are different in that they can result in variable payments. The charity receives a fixed percentage of the value of the trust, meaning valuations are ongoing. Because of these differences, it can be helpful to rely on the guidance of a Coral Gables-based attorney when it comes to choosing an option for a charitable lead trust.
If you are beginning the estate planning process, a CLT might make sense for your situation if you have a non-profit you care about and the resources to assist them immediately.
Charitable lead trusts in Coral Gables might be a good option for you, but setting them up can be a challenge. Call us right away to learn how our committed estate planning attorneys could help.
We evaluate your case and determine how we might be able to help.
We will meet with you to discuss your next options and lay out a plan.
Our team guides you throughout the process so you feel confident about your choices.
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