Texas Charitable Trusts

McKinney, TX Charitable Trusts Lawyers

What Is A Charitable Trust?

A Texas charitable trust is an organization formed to receive favorable federal tax treatment for a charitable purpose. In Texas, the process is easier than other states in forming a Texas Charitable Trust because we do not have a State income tax.

The federal government is always concerned with fraud in tax situations. Because fraud exists in the context of tax evasion, the government has rules for charitable trusts.

To learn more, read the information provided below. If you have questions, contact Willingham Law Firm, PC. Our charitable trust attorneys in McKinney are ready to help!

How Many Trustees Can I Have?

A Texas charitable trust should have more than one trustee. Restatement § 383. Rev. Rul. 66-219, 1966-2 C.B. 208, held that a 501(c)(3) organization is not precluded from exemption merely because the creator of the organization is the sole or controlling trustee or because the organization is controlled by one individual. The main concern is that the trust will benefit only the trustee’s interest if there is only one trustee.

Filing Documents

A Texas Charitable Trust does not require a filing like an LLC, limited partnership, or corporation. However, a Trust must keep orderly financial books and records and must file Form 1023, if it is to be exempt in Texas form federal income tax. This application must be filed within 15 months from the end of the month is which it was organized.

The following are other documents that must be in writing in order to have a valid charitable trust in the State of Texas:

  • Agreement
  • Declaration
  • Deed
  • Indenture
  • Instrument
  • Will (for testamentary trust)

Special Tax Rules for Trusts

Exempt trust are still taxable on UBTI. There are special tax rules for nonexempt charitable tax trusts and split-interest trusts. Also, some IRC 501 exemptions are not available to trusts. Furthermore, a revocable trust ordinarily cannot qualify for exemption under IRC 501(c)(3).

What Is the Difference Between a Charitable Trust & a Private Trust?

The following are differences between a Texas Charitable Trust and a private trust:

  • In a private trust the beneficiaries must be ascertainable within the period of the rule against perpetuities
  • A charitable trust must benefit a sufficiently large or indefinite class
  • A private trust has a limited term
  • An Attorney General may enforce a charitable trust

If you need help or more information, schedule an initial consultation with our charitable trust attorneys in McKinney.

EVERY CASE DESERVES CARE & ATTENTION

Read Recent Reviews from Our Clients
  • “Every experience has been outstanding!”

    - Sheldon C.
  • “They were so unbelievably helpful and kind after my father passed.”

    - Dani P.
  • “Professional, knowledgeable, and efficient service.”

    - Tana Gleim

Meet Our experienced Legal Team

Dedicated to Accomplishing Your Goals 
  • Taylor Willingham
  • Carla Alston
  • Andrea Lewandowski
  • Taylor Willingham Taylor Willingham

    Attorney

    McKinney Estate Planning Attorney Taylor Willingham brings a wealth of expertise and a deep commitment to legacy planning to ...
    Taylor  Willingham Photo
  • Carla Alston Carla Alston

    Attorney

    Compassionate Probate Lawyer in McKinney Carla Alston is an attorney who strongly cares for her clients and their family. ...
    Carla  Alston Photo
  • Andrea Lewandowski Andrea Lewandowski

    Attorney

    McKinney Estate Planning Attorney Andrea Lewandowski is an estate planning attorney located in McKinney, Texas. She is deeply ...
    Andrea  Lewandowski Photo

Contact Willingham Law Firm, PC.

Preserve Your Legacy Today
  • Please enter your first name.
  • Please enter your last name.
  • Please enter your phone number.
    This isn't a valid phone number.
  • Please enter your email address.
    This isn't a valid email address.
  • Please make a selection.
  • Please enter a message.