Bakersfield Charitable Trust Planning

Start with the intended roles of income and charity

A charitable remainder trust is irrevocable: it provides payments to noncharitable beneficiaries before a remainder goes to charity. Those two purposes should be discussed together, rather than treating the charitable gift as separate from the family’s income expectations.

Identify who is meant to receive payments and which charity or charitable purpose is intended to benefit from what remains. Then consider whether the arrangement still fits if family needs or expectations change, since the trust cannot simply be treated as a revocable plan.

• Who is expected to receive payments, and for what purpose?
• What charitable recipient or purpose should benefit from the remainder?
• Would the family still support the plan if its circumstances or priorities change?

Review the assets and records behind the plan

Before relying on a proposed document or beneficiary arrangement, make a clear inventory of the assets being considered and the records needed to identify and track them. Compare that inventory with the intended payment recipients and charitable remainder so the plan’s practical components can be discussed together.

Gather current account, ownership, and beneficiary information as preparation for a planning conversation. These are useful records to review; they should not be mistaken for a prescribed legal checklist or a guarantee that an asset can be used in a particular way.

• List the assets under consideration and note how each is currently titled or designated.
• Collect relevant account and beneficiary records.
• Write down questions about how the intended assets relate to payments and the charitable remainder.

Account for continuing administration

The charitable purpose does not end the trust’s administrative responsibilities. Tax reporting and compliance obligations continue, and income payments can have tax consequences. A family should therefore consider who will handle continuing records and reporting, and whether that responsibility is practical over time.

Do not assume that the arrangement automatically creates a deduction or makes income tax-free. The tax treatment of payments can depend on the circumstances, so discuss the implications with qualified tax guidance before relying on a particular result.

• Who is expected to keep records and address continuing reporting and compliance?
• How will the family account for the possibility that income payments have tax consequences?
• What tax questions need to be resolved before relying on a projected benefit?

Decide whether the structure fits before relying on it

A charitable remainder trust may fit a family that wants noncharitable beneficiaries to receive payments before a charitable remainder and accepts that the arrangement is irrevocable. It may be a poor fit if the family expects to revise the plan freely, cannot identify a workable approach to administration, or is relying on an assumed tax benefit that has not been evaluated.

A useful next step is to bring the asset inventory, beneficiary records, proposed charitable purpose, and administration questions to a planning discussion. Codi M. Dada Law Office P.C. has one in-person office in Novato and provides virtual services statewide, including to Bakersfield clients.