I have a question. If one sets up a Trust for a Charity, and appoints themselves the Trustee of that Trust, then my limited understanding under U.S. Law is:
1: The money is legally the Charities. It has been given by setting up the trust in the first place. (The advantage of giving now.)
2: The Trustee still has control over the money, and can decide to make investments to bolster it’s strength, and such. (The advantage of investing.)
Is this sort of a similar legal construction to what is desired?
Or alternatively, at least close enough that if you brought that to an actual lawyer the lawyer could say something more specifically helpful, like the fake legalese below:
“Rather than a trust, it sounds like you want to make a 412(c) Endowment for a public charity, I can generate the necessary paperwork, which will likely cost hundreds dollars, However, I need to warn you that you can’t use the money in the 412(c) to short sell as that is illegal under U.S Trust code 47c.” Particularly since states likely have differing laws on this anyway.
I see at least one obvious downside which is ‘That would cost legal fees.’ I don’t think generally lawyers are so expensive that this is a crippling objection, assuming some level of wealth, organization and/or fund pooling, but it definitely wouldn’t work if you were considering something along the small scale of “What do I what to do to maximize the effectiveness of my 100 dollars without working with other people?” though.
Are there other positives or negatives to this possibility I am not aware of?
Well, it appears to allow you to give money to someone/something else while still keeping control of the management of that money yourself.
So in theory, with a trust, the Charity is richer, but you’re still investing the money rather than giving it to them immediately.
This seems to guard against the failure mode of deciding to hold off on giving and instead investing the starter money, becoming very rich, and then deciding “Nah, my value system has changed. Now I want to buy a private island instead of saving thousands of starving children.”
Unless I just totally misunderstand trust law (Which is certainly possible.)
it appears to allow you to give money to someone/something else while still keeping control of the management of that money yourself.
Not “give money”—the charity still doesn’t get the money until it actually gets the money. What you give now is a promise that the trust in the future will give the charity something.
For example if the trust plans to disburse the money in 10 years, but the charity closes down in 5 years, have you given it anything?
seems to guard against the failure mode
Do you think the potential future you will also consider this scenario to be a “failure mode”? :-)
But yeah, you can use a trust as a precommittment device. However unless you’re committing at least $100K or so to it I don’t think it’s worth the bother. You will need lawyers to set it up anyway, you’ll have to maintain it, if you get cheap lawyers and they screw things up IRS might show up and be very unpleasant about it...
I have a question. If one sets up a Trust for a Charity, and appoints themselves the Trustee of that Trust, then my limited understanding under U.S. Law is:
1: The money is legally the Charities. It has been given by setting up the trust in the first place. (The advantage of giving now.)
2: The Trustee still has control over the money, and can decide to make investments to bolster it’s strength, and such. (The advantage of investing.)
Is this sort of a similar legal construction to what is desired?
Or alternatively, at least close enough that if you brought that to an actual lawyer the lawyer could say something more specifically helpful, like the fake legalese below:
“Rather than a trust, it sounds like you want to make a 412(c) Endowment for a public charity, I can generate the necessary paperwork, which will likely cost hundreds dollars, However, I need to warn you that you can’t use the money in the 412(c) to short sell as that is illegal under U.S Trust code 47c.” Particularly since states likely have differing laws on this anyway.
I see at least one obvious downside which is ‘That would cost legal fees.’ I don’t think generally lawyers are so expensive that this is a crippling objection, assuming some level of wealth, organization and/or fund pooling, but it definitely wouldn’t work if you were considering something along the small scale of “What do I what to do to maximize the effectiveness of my 100 dollars without working with other people?” though.
Are there other positives or negatives to this possibility I am not aware of?
What exactly are you trying to achieve by setting up a trust?
Trusts are typically tax-avoidance vehicles.
Well, it appears to allow you to give money to someone/something else while still keeping control of the management of that money yourself.
So in theory, with a trust, the Charity is richer, but you’re still investing the money rather than giving it to them immediately.
This seems to guard against the failure mode of deciding to hold off on giving and instead investing the starter money, becoming very rich, and then deciding “Nah, my value system has changed. Now I want to buy a private island instead of saving thousands of starving children.”
Unless I just totally misunderstand trust law (Which is certainly possible.)
Not “give money”—the charity still doesn’t get the money until it actually gets the money. What you give now is a promise that the trust in the future will give the charity something.
For example if the trust plans to disburse the money in 10 years, but the charity closes down in 5 years, have you given it anything?
Do you think the potential future you will also consider this scenario to be a “failure mode”? :-)
But yeah, you can use a trust as a precommittment device. However unless you’re committing at least $100K or so to it I don’t think it’s worth the bother. You will need lawyers to set it up anyway, you’ll have to maintain it, if you get cheap lawyers and they screw things up IRS might show up and be very unpleasant about it...