Businesses can gain immensely from charitable trusts, though these trusts are nonprofit organizations that are set up for the benefit of some other party. That is the reason why most businesses are setting up charitable trusts for themselves. It is not too difficult to set up a charitable trust either. A minimum amount of $100,000 worth in assets is enough to be eligible to set up a charitable trust. In addition, there are several privileges that charitable trusts have.
The following is a list of these privileges:
1) Charitable trusts will not cease to function even if they have not been able to fulfill their initial goals. These trusts have what is known as cy pres, a provision that allows charitable trusts to change their beneficiary options if they are not able to meet the first one.
2) Charitable trusts can remain working perpetually, which is not the case with other organizations. Most establishments have a particular tenure after which they have to either renew licenses or cease to function, but charitable trusts can go on indefinitely if they so wanted.
3) Charitable trusts are given permissions to establish themselves even if their beneficiary options do not seem to be quite concrete. Even if there is just a philanthropic concept, charitable trusts are given permissions to start.
Hence, it is very easy to start charitable trusts. That is what businesses do. The charitable trusts do fulfill the noble intention of serving some beneficiary, which could be an individual, a group of persons or an establishment. At the same time, the charitable trusts help the owners to manage their resources well.
The following is a list of benefits that the owners of charitable trusts are provided by the authorities:
1) Charitable trust owners are exempted from a portion of their estates taxes. These taxes can even be waived off if the established charitable trust is large enough in its scope.
2) Charitable trust owners are also benefited in terms of capital gains taxes. In this way, charitable trusts help to increase the overall income of the owner of the trust.
3) In case of retirement or winding up of business, the charitable trust funds can be used as a sort of retirement benefit plan for the owner. The charitable trust will continue to work as long as there are funds in it. However, it will also pay for the expenses of the owner.
4) Charitable trusts are very handy if there is a sudden demise of the owner of the assets. These trusts will then appoint a living trustee - or the living trustee could be appointed during the lifetime of the owner - and this living trustee will undertake the proper disbursement of the assets among the survivors. This happens if no will is made, and in many cases, even if there is a will, the living trustee can supersede the will in some points. An advantage of this arrangement is that the survivors do not have to wait for lengthy probate periods and nor do they have to pay heavy fees for legal procedures.
That is the reason why setting up a charitable trust is a worthwhile idea when the person is still alive. It will help to improve assets during life, and will help to properly disburse assets after death. Setting up a charitable trust is easier than setting up other organizations. However, since the rules differ from one place to another, it is necessary to look into state laws before planning to go ahead with the idea of setting up a charitable trust.
Ateeya Manzoor is the Managing Director of Mayfair Management Group and a skilled strategic and risk manager with over 20 years of experience. She has spoken at industry events, including the annual PLUS Conference with keynote speakers Secretary of State Condoleezza Rice and Apple Co-Founder Steve Wozniak and has spoken at the Ted Roger’s School of Management for Freelance Camp.
Ateeya's commitment to realizing potential extends in her philanthropic work. Through numerous charitable causes, talks, writings and mentorship, she is committed showing those who struggle that there is always a way to ascend. She is currently working on her first book.
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