Imagine having too much money to know what to do with it. For some people, that is true in life; for others, only in death. If you have children, you may decide that leaving them too much will harm rather than help them. Or perhaps you have no heirs and are not sure what to do with your assets.

Aristotle said, “The unfortunate need people who will be kind to them; the prosperous need people to be kind to.” There are always people, organizations or causes that could use financial help. Various studies have shown that giving benefits both giver and receiver.

Like anything to do with money, if you fail to plan, you will give more to the tax office than you need. If deciding to give money away, consider using a charitable trust as part of your estate plan. There are two types:

  • Charitable lead trust (CLT)
  • Charitable remainder trust (CRT)

They are almost the opposite of each other. With a CLT, you make payments to the charity for a set number of years or your life’s duration. When that period is up, what is left goes to your named beneficiary.

A CRT takes care of the person first, with payments going to you or someone you name for a set period or until you die. When it ends, the charity keeps what is left. The other difference is that in a CRT, the charity acts as trustee, managing the income for your immediate benefit and its long-term benefit.

Charitable trusts also bring tax advantages. Seek legal advice to find out more about how you can use your wealth to help others.