What are the benefits of gifting assets during estate planning?

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Many people create an estate plan to protect their hard-earned assets. This typically includes creating a will and a trust. If you are considering gifting assets to your loved ones during the estate planning process, you may want to consider creating a charitable trust. There are several benefits associated with gifting assets through charitable trusts including being able to distribute funds to beloved charities. Continue to follow along to learn about the benefits of creating a charitable trust and how a dedicated Montgomery County Trust Attorney can help you gift assets to your loved ones after you’ve departed. 

What are charitable trusts?

In Maryland, there are two types of charitable trusts a grantor can establish. These include charitable leads and charitable remainder trusts. These trusts allow grantors to gift assets to loved ones during estate planning. A charitable remainder trust makes distributions to designated beneficiaries and then allocates any remaining assets to charity. However, it allocates the funds to charities over a certain period. A charitable lead trust on the other hand does the opposite of a charitable remainder trust. A charitable remainder trust first distributes funds to charity, then the remaining assets are distributed to any designated beneficiaries. With both types of trusts, the grantor must outline which charities they want to receive their assets from and how they are to be distributed.

What are the different benefits of gifting assets during estate planning?

When estate planning, it is important to consider creating a charitable lead or remainder trust to gift assets to loved ones and beloved charities as it can help you avoid tax implications. This is extremely beneficial as it allows you to give more funds to the charities you love rather than a portion being deducted for taxes. Additionally, you will be able to avoid capital gains taxes. This is because charitable trusts preserve highly appreciated assets. An additional benefit of creating such a trust is that the trust’s assets will generate income for the beneficiaries. Essentially, when assets are given away they do not earn interest. However, in a charitable trust, the assets can be sold without incurring any tax liability. This type of trust can provide upfront tax benefits for donors. Moreover, charitable trusts allow you to spread the distribution of funds over time. There are several benefits to gifting assets through charitable trusts during estate planning. Nevertheless, many find the primary benefit of these trusts to be avoiding tax implications.

For more information on creating a charitable trust, please contact a trusted Montgomery County trust attorney. Our firm is committed to helping our clients gift assets to their loved ones and charities during estate planning.