Many different trusts are available in Maryland to meet your estate planning interests and to provide you with potential income during your retirement. One type that some high-wealth individuals consider is a charitable remainder trust (CRT), also called a split-interest trust. This trust type can help provide you with a stream of income during retirement while also providing funds to a charity that you want to support.
How charitable trusts work
Charitable trusts are useful estate planning tools because a designated individual or individuals can receive payments for a specified period. Often the person creating the trust will designate that the payments continue until their death. Upon termination of the trust, the remainder of the funds goes to a charity that the donor designates. Donors can indicate that the proceeds will go to their spouse upon their death before the named charity gets the proceeds.
You can also do the opposite by designating a charity as the primary beneficiary for a specific number of years and then allowing yourself or your family members to receive the remainder of the money on a specified date. The types of assets that you can place into CRTs include cash, publicly traded securities, real estate, and certain types of closely held stocks. In addition to donating to your favorite charity, these trusts also give you tax breaks that you may need.
Which trusts are suitable for you?
If you are considering placing your assets in a trust as part of your estate, you have many choices. Charitable trusts are irrevocable, meaning you can’t change the terms after you have established them. However, not all trusts are irrevocable. Revocable trusts let you change the terms as your needs change.
Take your time when determining what type of trusts are best for your estate. One significant advantage of trusts is that the assets don’t have to go through probate after your death, making it easier for your executor to settle the estate. Consider your choices carefully before establishing trusts of any type, especially irrevocable ones.