One of my recent articles for Jewish News was on the subject of Giving Trusts. Charitable giving is increasingly considered both a privilege and hobby, yet fewer families give to charitable causes every year. Multiple studies and foundations have reported on this issue, finding decreasing religious memberships and worries over the economy have played major roles in the decline. At the same time, many families are trying to establish a legacy of giving within their relatives. Such legacy is now typically being set forth in giving trusts.
What are Giving Trusts?
Giving trusts are trusts that are created by families solely to allow various family members to play a role in the charitable giving. They are intended to represent the intentions of giving and are shared among family members. Giving should align with personal charitable goals and fulfill a desire to improve the community.
Here’s how a giving trust works:
- Grantor: An individual or couple, typically parents or grandparents, create the giving trust and donate cash, investments, real estate and/or business interests to the trust.
- Trustee: An individual or couple, typically the same person as the grantor, manages the trust assets and distributes the trust assets to the charity or charities selected by the family distribution panel.
- Mission statement: The grantor sets forth a mission statement for the giving in the beginning of the trust. The mission is often to help specific types of charities — religious organizations, healthcare foundations or education scholarships, for example.
- Distribution panel: A group of people, typically the grantor’s family, decide what trust assets are to be distributed to which charity or charities and how much to distribute annually.
- Beneficiaries: The charities that receive the trust funds.
- Purposes of the distribution: The distribution panel can earmark the donation for a specific purpose — e.g., Jewish summer camp or scholarships for women in science.
Arizona’s Jewish nonprofit organizations rely heavily on community support. Maimonides noted, and scientific studies have proved, the act of giving benefits both the receiver and the giver. If you want to create a legacy of family giving and tzedakah, think about how best to accomplish your goals and include the whole family in the process.
For those who have the means of making regular donations and want to ensure that their family shares in this charitable giving, and continues these donations long into the future, a giving trust may be ideal. It could be a surprise what causes are near and dear to the hearts of your loved ones.
If you would like to discuss this type of trust or other estate planning strategies, schedule a meeting with me today. You can reach my office at (480) 719-7333.