Be a Trust Fund Baby Without Being Rich - New York Estate ...

In the past, it was only the wealthy that could take advantage of the tax breaks and other benefits of supporting a charity derived from charitable trusts. One reason for this was because it would often take over $100,000 to hire an attorney and start such a trust.

By pooling money among a group of people, however, you can set up your own charitable trust for very little - often with starting costs between $5,000 and $10,000. And the researchers at FindLaw have all the tips you need to know to pull off a pooled charitable trusts.

One of the great parts about pooled charitable trusts is that the charity itself, or an investment company, sets up the trust and is responsible for accepting donations from those who wish to give.

Each time you donate to a pooled charitable trust, you may take an income tax deduction. However, you cannot deduct the full amount you donated to the trust. You must keep in mind that you are deriving an income from the trust.

The charity is required to pay you or the beneficiaries you have named in an amount determined by the value of your total contribution as well as the fund?s yearly earnings. This income will be taxed just like normal income, but these payments can be deferred. For instance, many people who have contributed to pooled charitable trusts elect to defer all payments until they reach 65 or 70 in order to have additional income during their retirement.

Once you?ve set up a pooled charitable trust you can let people call your children trust fund babies, and show them that it?s not such a bad thing.

But you may want to keep one thing in mind: once you start acting like the wealthy you are also faced with other financial the wealthy face, which includes capital gains taxes. This is something you should speak to an attorney about.

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Source: http://newyorkestateplanningnews.com/2012/02/be-a-trust-fund-baby-without-being-rich.html

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