Revocable living trusts are one of the most popular trust set up for charitable purposes. With a revocable trust, the donor may appoint a trustee, make a gift now, add to it in the future, and maintain control of the assets. The term revocable is important because you may take back or change the conditions of the trust if your personal or financial situation changes. You also have a great deal of flexibility in how the earnings from the trust are distributed. You may designate the earnings be paid to the Missouri Southern Foundation, individuals such as your spouse or children, or use the earnings as income for yourself. The term living is used because the trust is created during your lifetime. Since you retain control of the assets in the trust, there is no charitable tax deduction when the trust is created however.
Mrs. Smith, invested wisely during her working years and currently makes a $2,000 contribution each year to the Missouri Southern Foundation. After careful consideration, she has decided she would like to make a substantial contribution to the Foundation from her estate. She has decided to place "in trust for the Missouri Southern Foundation" the sum of $300,000. The earnings from this trust, about $18,000 each year are paid to the Foundation to be used as directed by Mrs. Smith’s trustee. Since the earnings are given to a charitable organization they are tax deductible. At the time of her death the assets in the trust will pass directly to the Foundation, avoiding probate and estate taxes.
This is only one example of how a revocable living trust can be used to meet the needs of a donor. In all cases, donors should consult their attorney, accountant, or estate planner when considering gift giving.