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Charitable Trusts Lawyer in Wisconsin

Charitable trusts are trusts that provide a great way to give back to the community. They are, however, typically irrevocable once created. You must weigh your purpose and needs against the benefits and disadvantages.

At Heritage Law Office, our estate planning attorney in Wisconsin will listen to your expectations and needs and thoroughly review how a charitable trust will accommodate and address those needs. Contact us for a free consultation either by using our online form or calling us directly at 414-253-8500.

Understanding Charitable Trusts in Wisconsin

A charitable trust is a way for a person to donate certain assets to a tax-exempt charitable or non-profit organization. There are two different kinds of charitable trusts.

Charitable Lead Trusts in Wisconsin 

A Charitable Lead Trust (CLT) has a certain amount of its income set to go to a charitable organization. The amount that remains will either stay in the trust or be disbursed to the trust's beneficiaries (designated by the trust grantor). These types of trusts are most beneficial to beneficiaries that do not depend on the trust as a main source of income. 

Charitable Remainder Trusts 

A Charitable Remainder Trust (CRT) operates differently than a CLT. Beneficiaries are paid a certain predetermined amount, and the remainder is then paid to the charitable organization.  These types of trusts are a better choice when the beneficiaries depend upon the money from the trust as a main source of income. 

Benefits of a Charitable Trust in Wisconsin

There are several reasons why people choose to place their assets in charitable trusts because it's not only the charity that benefits. Here is a brief overview of these benefits.

Tax Benefits

There are certain tax benefits that may be available immediately to donors of charitable trusts, and additional benefits when it comes to reducing the estate taxes.

Asset Protection

Placing property in a charitable trust can be a valuable way to protect assets from creditors. 

Creation of Income

Placing assets in a trust and then selling them may be a way to create income without incurring any tax liability. 

Disadvantages of a Charitable Trust in Wisconsin

There are several reasons why people decide against placing their assets in charitable trusts. Here are a few of those reasons, but it is always best to speak to a charitable trust attorney in Wisconsin to know for sure what will work best for your needs.

Unable to Amend

Charitable trusts are irrevocable, which means that once it has been established, the terms are unable to be easily amended (if at all). For some, the unpredictability of their financial future and the inability to change the trust should they need the income at a later date is enough to prevent them from choosing a charitable trust.  

Cost Effectiveness

Establishing and operating a charitable trust includes costs and fees that are enough to stop some people from using them. 

Family Matters

Some family members may not understand how trusts work or do not like the donations being made to the charitable organization, creating tension among family members. 

Terminating a Charitable Trust in Wisconsin

A CRT is terminated when the income stream that is designated for the beneficiaries (not the charity) ends. The remaining property in the trust is then disbursed to the charitable organization. 

A CLT has a certain set term in which it is to operate and then when it ends, the remainder is distributed to the beneficiaries (not the charity).

Sometimes circumstances arise which cause the need or desire for a charitable trust to be terminated early. Nevertheless, as it is irrevocable, it is highly unlikely that early termination is possible. 

Contact a Charitable Trusts Attorney in Wisconsin Today

Charitable trusts are for wealthy investors who want to do something good for the community and can benefit everyone involved. We at Heritage Law Office in Wisconsin will help you make a charitable trust an effective tool to accomplish your financial and philanthropic goals. Contact our estate planning attorney today for a free consultation by filling out our online form or calling us at 414-253-8500.

Frequently Asked Questions (FAQs)

What is the difference between a Charitable Lead Trust and a Charitable Remainder Trust?

A Charitable Lead Trust (CLT) is a type of charitable trust where a certain amount of its income is designated to go to a charitable organization, with the remaining amount either staying in the trust or being disbursed to the beneficiaries as determined by the trust grantor. On the other hand, a Charitable Remainder Trust (CRT) works differently. In a CRT, beneficiaries are paid a predetermined amount, and the remainder is then given to the charitable organization. These trusts cater to different needs depending on whether the beneficiaries rely on the trust as a main source of income or not.

What are the benefits of setting up a charitable trust?

Establishing a charitable trust can provide several advantages. Notably, there may be immediate tax benefits available to donors, along with additional potential benefits in terms of estate tax reduction. Furthermore, charitable trusts can serve as a valuable strategy for protecting assets from creditors, and they can also enable the creation of income without incurring tax liability when assets placed in the trust are sold.

Are there any disadvantages or challenges in setting up a charitable trust?

While there are benefits to setting up a charitable trust, there can also be potential downsides. These include the fact that charitable trusts are typically irrevocable, meaning the terms can't be easily changed once established. This could pose problems if an individual's financial circumstances change. Additionally, the costs and fees associated with establishing and operating a charitable trust might deter some individuals. Moreover, family dynamics can become a point of contention if certain family members disagree with the concept of the trust or the chosen charitable organization.

What happens when a charitable trust ends?

The conclusion of a charitable trust depends on its type. A Charitable Remainder Trust (CRT) terminates when the designated income stream for the beneficiaries (not the charity) concludes, with the remaining property then going to the charitable organization. A Charitable Lead Trust (CLT), however, has a fixed term of operation, after which the remaining amount is distributed to the beneficiaries and not the charity.

Can a charitable trust be terminated early?

In general, it's unlikely that a charitable trust can be terminated early because they are typically irrevocable. This means that once established, the terms are difficult, if not impossible, to amend. However, circumstances can vary, and legal consultation should be sought if early termination is being considered.

Contact Us Today

For a comprehensive plan that will meet your needs or the needs of a loved one, contact us today. Located in Downtown Milwaukee, we serve Milwaukee County, surrounding communities, and to clients across Wisconsin, Minnesota, Illinois, and California.