A Charitable Trust is a structure put in place to help serve people who are in need of assistance.
A donor transfers his assets to a set of directors or trustees often of a trust company.
The trustees are in charge of managing the assets, whether making payments, important decisions or other formalities.
Indeed any decision regarding the assets held in trust must be approved by the trustees who will hold a board meeting or appoint a working committee to decide the outcome.
In a charitable trust all the decisions that are undertaken by the trust are first and foremost for charitable and social causes and never focused on personal gain from the assets.
For example, the assets may be used start a business whose focus may solely be providing help or whose profits are donated to a worthwhile charitable cause.
Once a charitable trust has been established, the founder or donor can continue to increase the value of assets held in trust.
They will not though, be allowed to remove any of the assets from the trust without being liable for any type of tax on the assets such as capital gains tax.
Sensible planning of a charitable trust means that the donors can take care of themselves in a reasonable manner through drawing a stipend from the trust in their retirement years, as well as helping people less fortunate than themselves.
Through sensible wealth planning a living trust can also be established which will provide for loved ones after they pass away, as individuals cannot be benefactors of a charitable trust.