Charitable Trust Planning for Carpinteria Residents

Start with the purpose and the people involved

Clarify the intended result before focusing on a trust label. Is the priority to provide payments to particular people during a period of time, direct a remainder to charity, or address both goals? A charitable remainder trust is irrevocable and can provide payments to noncharitable beneficiaries before a charitable remainder. That structure calls for careful consideration because the decision is not simply a temporary arrangement.

Name the people or charitable organization you have in mind and describe the purpose you want the plan to serve. These are planning questions, not a guarantee that a particular trust will meet every goal. The intended recipients, charitable purpose and proposed assets all matter to the discussion.

• Who do you want to receive payments, and what purpose would those payments serve?
• Which charitable recipient or purpose do you want to benefit from the remainder?
• What outcome would make the arrangement unsuitable for you or your family?

Identify the asset and who has authority over it

Before deciding on a next step, make an inventory of the assets you are considering and identify how each is owned. Ask who has authority to make decisions about each asset and whether another person, entity or existing arrangement is involved. This practical review can help focus the conversation; it does not by itself establish that an asset can or should be placed in a trust.

For each asset, gather a current description and any records that help explain ownership or decision-making authority. If ownership or authority is uncertain, make that the first question to resolve rather than assuming the asset is available for the proposed plan. The answer may change what can usefully be discussed next.

• List the assets you are considering and the records that describe their ownership.
• Note any uncertainty about who can make decisions concerning an asset.
• Bring forward existing planning documents that may affect the discussion.

Compare payment goals with the charitable remainder

A charitable remainder trust places two goals in the same arrangement: payments to noncharitable beneficiaries and a remainder for charity. Discuss how those goals fit together, who should receive the payments, and whether the charitable remainder reflects your intentions. Do not assume that naming a charitable purpose makes the financial or administrative consequences insignificant.

An irrevocable structure deserves particular attention before you proceed. Consider whether you are comfortable making a commitment that is not simply reversible, and whether the people involved understand the intended sequence of payments and charitable benefit. The plan should be evaluated against your actual priorities, not an assumed tax result.

Plan for ongoing records and compliance

Creating the arrangement is not the only consideration. Tax reporting and compliance obligations continue, and income payments can have tax consequences. Before settling on a plan, discuss who will keep the relevant records, coordinate the ongoing administration and address reporting responsibilities.

Prepare questions about the expected administrative work and the records that will be needed. A charitable trust does not promise a tax deduction or tax-free income. The tax treatment depends on the arrangement and its circumstances, so avoid basing a decision on an assumed tax benefit.

• Ask what continuing records and compliance tasks the proposed arrangement would involve.
• Discuss how income payments may affect the people receiving them.
• Identify who would be responsible for keeping track of ongoing administration.

Discuss your plan with Codi M. Dada Law Office P.C.

Codi M. Dada Law Office P.C. has an in-person office in Novato and provides virtual services throughout California. For a Carpinteria planning discussion, bring your goals, proposed recipient and charity, asset ownership information, and questions about continuing responsibilities. A useful first question is whether you have authority over the assets you want to include; resolving that point can shape what should be considered next.