Often, I sit down with single people and older adults who want to leave money to a charity. The question asked is “How do I give money to a charity when I die? One option is to create a Charity Trust to support a non-profit cause that is close to your heart. Are you single and have no children? Maybe you have children but want to leave money to Charity. A Charity Trust allows you to give money to a recognized 501(3)(c) charity when you die. You can create this specific trust as part of your estate planning.
What is a Charity Trust?
Earlier this year, I published a blog discussing the concept of Boutique Trusts. Today, my focus is on Charity Trusts. What is a Charity Trust? The IRS describes it as a trust in which all the asset interests are devoted to charitable purposes. The IRS provides specific tax rules and guidelines on setting up the Charity Trust.
Leaving Assets to a Charity Trust
You may leave your money to charity in two ways. The first manner is by Will. If you write a will and leave everything to charity, a charity trust is established upon your death. In Missouri, a will must be filed within one year. If the will is not filed, your estate may not go to the Charity, but will go through Probate for a determination of heirs. By creating a revocable living trust, the Charity Trust goes into effect after the executor pays administration costs and debts.
What is a Charity Organization?
The IRS defines what constitutes a Charitable foundation. It also solely defines and determines what meets the tax-exempt status of a charity organization. The IRS states that a charity organization is “organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, educational, or other specified purposes and that meet certain other requirements are tax exempt under IRS Section 501(c)(3)” (see https://www.irs.gov/charities-non-profits/exempt-organization-types for more information).
How Do I Choose a Charity?
Often people choose a cause that fulfills a personal belief, or a cause to support. It is vital that when you leave your assets in a Charity trust, that you research the Charity. Too often, people are tricked into giving money to an organization that is not a true charity organization. Unfortunately, fake charities exist but researching the charity will help you avoid scams. On a Federal level, the IRS has a Self-Check link to make sure the charity is legitimate. On a state level, the attorney general’s website provides listings for recognized charities. Your state’s attorney general office oversees compliance of charity organizations. In Missouri, you can check the name of your charity to make sure it is legitimate at https://ago.mo.gov/civil-division/consumer/check-a-charity.
Leaving Money to Charity
Perhaps, leaving your money to a larger national charity scene does not interest you. You can create a charity trust to help a local charity, including your local religious organization. An example of a regional charity organization is one close to my heart and my law firm’s Cause Partner: The Down Syndrome Association of Greater St. Louis. DSAGSL (https://dsagsl.org/) is local and under the umbrella of the national Down Syndrome Association. Your Charity Trust is set up to provide funding to a cause close to your heart and close to your home.
Helping You with a Charity Trust
Don’t leave your estate assets to chance. If you consider leaving assets to a charity, I am able to work with you and help you create one as part of your estate plan. If you have questions about setting up a Charity Trust, call me or set up an appointment today and let’s get started!