McKinney Estate Planning Attorney
Call to Request a Consultation 214.499.9647
Understanding Trusts Trust Our Team at Willingham Law Firm

Texas Charitable Trusts

How Can Our MicKinney Estate Planning Lawyers Help You?

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 The Willingham Law Firm, PC today!

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 a free initial consultation with our estate planning attorneys in McKinney, Plano, or Frisco.

Recent Reviews
From Satisfied Clients

  • TAYLOR HAS DONE A FANTASTIC JOB!

    “As a Certified Financial Planner, I recommend the Willingham Law Firm for my client's estate planning needs. Taylor had done a fantastic job for my clients. ”

    Jeffrey Reddick, CFP

  • TAYLOR AND HIS TEAM GO THE EXTRA MILE

    “Taylor and his team did a great job with our families estate planning needs. He was very professional and made our experience a positive one. We would highly recommend him to anyone needing legal advise.”

    Michelle Hutchison

  • Taylor and his team have been invaluable assets to me.

    “Taylor and his team have been invaluable assets to me. Taylor has a way of taking complicated subjects and breaking them down to something tangible and simple to work through. Rachelle might be the most helpful person ever! She has been great in explaining and teaching. Highly recommend the firm!”

    Brad Barton

  • I WAS AMAZED!

    “The Willingham Law Firm created our trusts for our children. I was amazed at how simple he made the process. ”

    Curt Webber

  • Me and my husband went to Willingham Law Firm to have wills done in our new home state of Texas.

    “Me and my husband went to Willingham Law Firm to have wills done in our new home state of Texas. Taylor and his staff exhibited extreme knowledge and skill with regard to estate law, which, in turn, put us at ease with the decisions we had to make. They guided us through each step and we couldn't be more pleased with the outcome. This place is top-notch! Thank you for all your help.”

    Stacy Rollans