Jun 25 2010

Charitable Trusts

Anyone interested in assisting a favorite organization by making a significant financial donation, while potentially reducing their personal tax liabilities may wish to consider establishing a charitable trust. Simply stated, a charitable trust is an irrevocable legal construct in which property is managed by one person or entity for the benefit of a charitable organization or purpose. This type of trust can be created during a person’s lifetime, or they can be testamentary in nature, meaning that they commence existence upon the donor’s death. Two main types of charitable trusts worth considering are the charitable lead trust and the charitable remainder trust.

A charitable lead trust is a legal structure through which payments or donations of either a fixed dollar amount or of a portion of the trust’s principal amount are made to the selected charity. Once the trust’s term is completed, the funds remaining in the trust can revert to the donor or to any heirs or beneficiaries chosen by the donor. It is sometimes possible for the donor of a charitable lead trust to realize a current income tax deduction or a gift tax deduction for establishing this type of gift, but that will be determined by the type of structure ultimately selected. While a non-grantor trust will not result in a present income tax deduction, it will remove the asset or a portion of its value from the donor’s taxable estate.

Charitable remainder trusts are, in essence, a charitable lead trust in reverse. Remainder trusts provide a stream of trust income to designated beneficiaries of the donor, and a public charity or private foundation receives the remainder amount at the termination of the trust term. The trust term may be defined by lives in being or a term of years. This type of trust is typically tax-exempt. In most cases, donors can claim an income tax deduction and can possible avoid immediate capital gains tax liability at the time the trust disposes any appreciated trust asset.

Please note that the above material is for informational purposes only and is not intended to constitute legal advice.

Before making donations or charitable trusts, contact the Florida Probate Lawyer to set up a legal consultation.


Jun 25 2010

Difficulties That Extend the Probate Process

The probate process occurs when property is to be passed, due to a death, to the legal heirs. This can be an emotional time for all involved, and sometimes things are overlooked that lengthen the process and make more difficulties than necessary for the survivors. There are things you can do to prevent this situation, whether you are making a will or are one of the beneficiaries of a will.

First, if you are making your will, you should seek the advice of a competent attorney to help you decide the best way to dispose of your assets and avoid unnecessary taxes or problems with division of property. “Do-it-yoursef” will kits rarely give you the flexibility to plan your estate effectively, even if you do not own much property. Further, as they are constructed for mass marketing, they do not take into account various state laws regarding inheritance. Many difficulties have arisen from probate judges refusing to probate “homemade” wills or being unable to interpret them.

Another thing that can delay the process is multiple wills. If you do decide to change your will, make sure that an attorney handles the change for you. Wills can be added to by something called a codicil; they are also nullified by marriage or birth. If you experience a life-changing event, you must consult with your attorney as to how to handle your will changes. A new will should always be drawn up by a lawyer and properly witnessed so there is no doubt of its precedence; further, all copies of old wills should be destroyed.

Finally, if you are a beneficiary of a will, you should submit in a timely manner to any and all requests of the probate court. Most wills name one or two beneficiaries as executors. If you are an executor, meet with the attorney who drew up the will and comply with all requests immediately, in order to ensure that there are no unnecessary delays.

This article is not intended as legal advice.

Legal Reference: The Law Office of Andrew M. Lamkin, P.C. in Long Island, New York