TRUSTS- Trusts are established for a variety of reasons by people of moderate to substantial means. A trust can:

Provide you or someone else income for life or for a predetermined number of years.

Delay distribution of your property or money until your children reach a preselected age.

Result in having your property professionally-managed for life or a predetermined number of years.

Pay college costs for your children and grandchildren and provide you with additional income and estate tax benefits

Help combine charitable giving with tax savings as part of your financial planning. For example, by transferring cash or other assets into a charitable trust, income may be paid to you or another beneficiary for a term of up to 20 years, or for the lifetimes of one or more people you name. After the term of years or at your death, the charitable remainder (property in the trust) passes to IITBHF. You receive income tax benefits from the gift when the trust is created and estate tax benefits at your death. Assets that otherwise would be subject to capital gain tax if you sold them during life can be placed in a charitable trust and sold by the trust without income taxes, allowing the full amount of the sale proceeds to be reinvested in higher-yielding investments. The trust is generally exempt from income taxes. The gross sale proceeds invested by the trust likely will provide you with more income than you could earn by individually selling the assets, paying the income taxes and investing the remaining net proceeds. You also get an income tax deduction based upon fair market value of the donated asset, rather than your original cost. That income can be fixed or fluctuate with the value of the trust’s assets. With the right assets, the income distributed to you can be tax free. This concept also helps you get more income during retirement.

Use appreciated shares in a mutual fund to create a four-year charitable remainder trust for the four years your child or grandchild is in college. In this instance, your mutual funds will be sold by the trust without income tax and the sales proceeds reinvested. Your child or grandchild will receive a fixed amount each year of college. You benefit from an income tax deduction from the funds placed in the trust. Done correctly, the costs of college are not subject to gift taxes. The money left in the trust after four years goes to IITBHF. If you are worried about other family members, you can use what you saved in income taxes as a source of cash given to family members who purchase a life insurance policy on your life. Since you don’t own the policy, you pay no estate taxes on the death benefit, and the family receives the money income tax free. You have educated the children, benefited IITBHF (education at IIT Bombay) and replaced the asset given to the charity. All you lose is the estate tax burden.

A charitable trust also can ensure that your older relatives receive proper care. Although expenses for such care likely are not income tax deductible