A Charitable Trust is one of the best possible ways of serving people who are in need. In this type of trust, a donor transfers his assets to a set of directors or trustees. These trustees are in cha…
A Charitable Trust is one of the best possible ways of serving people who are in need. In this type of trust, a donor transfers his assets to a set of directors or trustees. These trustees are in charge of the activities, funds, and other formalities. All activities have to be approved by the trustees who can appoint a working committee or a few board members to help them. All activities performed by the trust are for a social cause and it is never focused on personal gains. It might use funds to start a business establishment with the main aim of creating wealth in the name of the trust which is run to provide the necessary help for the needy in the society.
Charitable trusts or charitable organizations are started either to help one section of the society or for general causes. Some might focus on woman’s issues and others on child welfare. Whatever the cause, the trust always works for the betterment of society at large. Special grants, tax deductions, and special benefits are offered by the government in order to aid and help the quality of the trusts. It also gives tax exemptions to individuals or firms who wish to donate funds to such charitable trusts.
A charitable trust must always be registered legally before the day of its inception. A properly registered trust is eligible for gaining all the support and benefits not only from the government but also from banks that can provide cheap loans to run the trust. Many foreign funds too can be effectively extracted when trust is registered properly.
All trust need not be for a social cause as many trusts like the charitable lead trust are started with the dire purpose of ensuring better safety of the assets and the property to their own siblings. Although there is no income tax deduction when you create a charitable lead trust, your gift or estate tax is greatly discounted and any growth is passed to your heir’s gift and estate tax-free.
A charitable remainder trust in return gives income for life to two sets of beneficiaries. The first set is the donor and his/her spouse. The second set is the name of the charities that the donor specifies. Thus among the many types of charitable trust, the best, of course, is the nonprofit charitable trust which can benefit society and the needy without any selfish motives. These trusts can change society and thus needs to be encouraged by timely support and funds. People should freely donate to such charitable organizations and ensure that they too participate in such social activities which can make this world a better place to live in.
