Connecticut residents with favorite charities may consider including charitable trusts in their estate plans. Charitable trusts are efficient philanthropic tools that can provide favorable tax incentives for donors. While charitable trusts adhere to the same tenets as other types of trusts and are regulated by the same concepts, they are very distinctive in certain ways that individuals should be mindful of.
A charitable trust can be defined as a trust that has a charitable goal. Instead of designating a corporation or person as a beneficiary, the grantors are required to describe the purpose of the charitable trusts. Charitable purposes may include advancing a religion or education, promoting health or governmental goals, relieving poverty and other purposes that can be advantageous to the community.
One important distinction of charitable trusts is that while they are required to have a charitable purpose, they are not required to have a specific beneficiary. The beneficiary of a charitable trust can be the indeterminate general public who will receive the economic and social benefits provided by the trust.
Another important distinction is that charitable trusts can last indefinitely, making the Rule Against Perpetuities inapplicable to them. The rule was implemented to prevent estate planning that limited the use of a property for an inordinate amount of time. Because public policy addresses the issue of whether perpetual charitable purposes should be allowed, an exception for charitable trusts is usually upheld by courts.
An attorney who practices estate planning law may assist clients with creating estate plans that suit their financial goals. The attorney may suggest certain types of trusts to use, such as charitable trusts, for clients who want their estate plan to support their philanthropic endeavors. Counsel may be provided on how the trusts may be used to avoid probate as well.