Charitable Trust Planning for Atherton Residents

Start with the purpose and the people involved

Clarify the purpose you want the trust to serve. Is the priority to provide payments to one or more people during their lifetimes, direct a remainder to a charitable beneficiary, or combine those goals? A charitable remainder trust can provide payments to noncharitable beneficiaries before a charitable remainder. It is irrevocable, so the decision involves a lasting commitment rather than a readily changeable gift plan.

• Identify the people you hope to benefit through payments and the organization or charitable purpose you want to benefit afterward.
• Discuss what should happen if an intended beneficiary or charitable recipient changes circumstances or is no longer an appropriate choice.
• Consider whether making an irrevocable commitment fits your broader plans for your assets and the people who may depend on them.

Understand income, remainder and tax consequences

The trust’s payment arrangement and charitable remainder should be considered together. Payments to noncharitable beneficiaries can have tax consequences, and tax reporting and compliance obligations continue while the trust is operating. A charitable purpose alone does not establish that a particular contribution will qualify for a deduction or that payments will be tax-free.

• Ask how the proposed payment structure is intended to work and what records will be needed to report payments and trust activity.
• Discuss the tax treatment of anticipated payments and the charitable remainder with qualified advisers before relying on a tax result.
• Do not assume a charitable trust automatically creates a deduction or removes tax consequences.

Separate named roles from authority and administration

A person named in trust documents may have a role under those documents, but being named does not by itself establish what authority that person has or resolve every administrative question. The trust’s terms and the circumstances matter. Identify who is expected to handle records, coordinate payments, communicate with beneficiaries and charitable recipients, and address ongoing reporting and compliance.

Before settling on a structure, discuss what the proposed responsible person is expected to do, what decisions the trust terms assign to that person, and when further professional guidance may be needed. These responsibilities are distinct from the beneficiaries’ receipt of payments and the charity’s eventual interest.

• Make a list of the records, payment activity and reporting responsibilities you expect the trust to involve.
• Ask which decisions belong to the person named in the documents and which may call for additional authority or professional input.
• Consider whether the person you have in mind is willing and able to take on continuing administration.

Prepare for a planning discussion

Bring a practical summary of your goals, the people you hope to benefit, the charitable recipients you are considering, and the assets you may want to discuss. An inventory is a useful starting point for identifying what requires further review; it does not determine whether an asset is appropriate for a charitable trust or establish a tax result.

Codi M. Dada Law Office P.C. has one in-person office in Novato and provides virtual services statewide, including for Atherton residents. A next step is to discuss whether an irrevocable charitable remainder trust fits your objectives and what ongoing responsibilities its proposed terms would create.

• Prepare a current asset list and note any records or questions you have about each asset.
• Write down who you hope will receive payments, which charity or charitable purpose you are considering, and questions about administration and reporting.