People in North Carolina can contribute to a charity as well as passing on assets to a beneficiary with a charitable split-interest trust. There are two types of charitable trusts. A charitable lead trust is set up to make donations to a charity on a regular basis for a set amount of time. When the time ends, the remaining assets go to a noncharitable beneficiary. A charitable remainder trust works in the opposite way in that it first pays out to a beneficiary over a certain period of time. Whatever remains at the end of that period then goes to the charity.
Tax-exempt charitable trusts can help maintain the worth of some assets because it is possible to sell property within the trust without having to pay capital gains tax. A charitable trust can turn an asset that is not profitable into one that generates income when the asset is sold by the trust.
There are different ways to set up a charitable trust. For example, distributions may go to a donor-advised fund instead of straight to a charity. This gives a person the ability to change the charity. A CRT can also be used to fund life insurance.
There are a number of other types of trusts besides charitable trusts that a person may use in various ways. An attorney might review some of these trusts and strategies for using them in an estate plan. Trusts can be set up to protect assets from creditors as well as to control the distribution of assets to beneficiaries who would be profligate with a lump sum bequest under a will.