Minnesota residents who would like to leave a part or all of their estate to organizations that support their favorite causes may consider using charitable trusts. As estate planning tools, trusts can provide attractive tax incentives for the donors. While charitable trusts are regulated by the same principles as other types of trusts, individuals who want to benefit from the estate or tax advantages that charitable trust can offer should be aware of some important distinctions.
Charitable trusts can be simply defined as trusts that have charitable goals. According to Uniform Trust Code Section 405, those charitable purposes may relate to the advancement of religion or education; the relief of poverty; the advancement of governmental, municipal or health purposes; or the promotion of any other purposes that can benefit the community.
One of the aspects in which a charitable trust differs from a non-charitable trust is that it does not require a beneficiary. For charitable trusts, the beneficiary is understood to be the general public that will benefit from the economic and social advantages the trust will provide.
Another important distinction is that charitable trusts can last forever, at least in theory. The Rule Against Perpetuities, which was established to prevent estate plans that restricted the use of a property for an inordinate length of time, was created by lawmakers to address how public policy handles the authorization of perpetual charitable purposes differently and does not apply to charitable trusts.
An attorney who practices estate planning law may advise clients about what type of legal documents are necessary to preserve their assets for beneficiaries. Depending on the financial goals of the client, the attorney may advise charitable trusts for assets intended to for charity organizations or living revocable trusts so that certain assets can be used during a client’s lifetime.