Trusts have become an increasingly popular part of the estate planning process in recent years. Many factors have motivated individuals to set up trusts. Individuals have done so as a tax-savings measure or to protect their assets for future generations from creditors.
Other people have set up trusts to benefit non-profit organizations that they believe are worthy of support — but it can be hard to figure out which organizations deserve the money the most. When you’re trying to decide on a charitable trust, you need to weigh various factors about each organization you consider. Here are two things that can help:
1. Carefully research benefactors
You often hear around the holiday season that you should research charities before donating to them. You should do the same with any charity you might decide to endow with your trust. It may be helpful for you to learn about its spending habits to see how money-conscious it is. Find out things like whether the majority of the organization’s money goes to administrative costs or to its actual causes.
2. Get to know how the charity functions
Learning more about a charity’s leadership and operations may also aid you in narrowing down your list of potential benefactors. You may find it helpful to work with a local chapter or assume a leadership role in the organization to better understand its inner workings. You may gain some added insight into the impact the charity is making in your local community and how they use their funds. That can help you better understand a charity’s nature and ethics.
When you’re ready to draft your trust
You’ll need to decide whether you plan to give the charities that you select lump sum donations or to piece it out over time. You’ll also need to appoint someone to administer your trust. An attorney can go over some additional indicators that you’ll want to account for when selecting benefactors and advise you of other considerations you’ll want to make in setting up your trust.