investing

Setting up a charitable trust

Plan also to pay annual administration fees to maintain this trust. Again, the amounts depend on a range of individual choices from the type of charitable trust to the payout terms. Some managers charge on a percentage scale: a percentage annually based on the value of the gift as of Jan. 1 each year, plus a separate fixed fee.

If such management fees scare you off, you can't afford a charitable trust in the first place, advisers agree.

"In general, it takes less money to create a charitable trust than any other kind," says Megan Wiles, executive director of The Legacy Fund.

Just how much you need depends on the manager as well. Some universities, for example, set up their planned giving management at $50,000 in the account. Large banks typically want to see $1 million before they bother to mess with it, Bickel says.

Wilkie doesn't see why anyone would want to set up a charitable trust for less than $500,000. Wiles puts the entry point at $100,000, especially if you choose the remainder trust route, but her organization will work with $25,000 trusts.

"People think if they hold on to their money until they die, they'll have better use of it," Bickel says. "That's a myth."

To illustrate, pretend you have $10 million. If you control it through portfolio investments and savings vehicles during your lifetime, it must go through probate at your death before your charity sees its cut.

"Probate will take more of that money than if you gave it away alive," he adds.

Charitable trusts hand you more flexibility to dictate who gets what, and you can even change your mind on the beneficiary, which you can't do if you took the less complicated way out and wrote a check.

The only thing you can't do is dissolve the trust. It's a legally inviolate lock box, which is why advisers drill their clients on contingency plans in case of stock market dips, company bankruptcies and other financial catastrophes. And it's not to be confused with an investment vehicle -- establishing a charitable trust won't leave you richer than if you hadn't given the money, Wilkie points out.

"The rule is that charitable decisions are the first to change and the last to be made," he comments. "This is truly discretionary income, after you send the kids to college and secure your retirement lifestyle."

Prime candidates aren't just the over-60 retirement crowd. Bickel see this as a potential fit for anyone who suddenly inherits money or finds a windfall in a divorce settlement.

"For someone in that 40- to 50-years-old range, in their maximum earning power, charitable trusts can help them with the tax base for the rest of their life," Bickel says. "And they are young enough to lend their energies to perpetuating the values and hallmark they want the family name to stand for."

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