Charitable trust

[lukesdaddy]

What is the name of your state?North Carolina


I have a friend who has a 6 year old son who was recently diagnosed with Cancer. She is a single mother who has been out of work since the diagnosis, and is unsure when she can return. Different schools, restaurants, etc.. have been raising money for her and her son. Does she need to set up a charitable trust to house the money coming in? I know that gifts are not taxable to the recipient, but I am not sure if a trust is necessary. I do know that she plans on using the money raised to help with medical bills, rent, etc.. Any help would be greatly appreciated.

 

[BlondiePB]

Different schools, restaurants, etc.. have been raising money for her and her son. Does she need to set up a charitable trust to house the money coming in?

Yes. Legitimate charitable trusts are set up at banks.

 

[lukesdaddy]

I was under the impression that a trust was set up to protect assets. There is not a taxable event if she receives a monetary gift whether it is $5 or $5 million dollars. I spoke with a partner in our accounting firm, and he stated that only if she needed to protect these funds from garnishments, etc.. would she need to set up a trust.

 

[BlondiePB]

I was under the impression that a trust was set up to protect assets. There is not a taxable event if she receives a monetary gift whether it is $5 or $5 million dollars. I spoke with a partner in our accounting firm, and he stated that only if she needed to protect these funds from garnishments, etc.. would she need to set up a trust.

Though trusts protect assests from going through probate, trusts are assests that can be garnished by creditors. Statutes regarding this do vary among the states.

When a person is in such a predicament that funds are raised by organizations to contribute to (in this case) medical expenses, trusts are set up at banks for the funds to be deposited into. Not doing so can/will view this as a scam. Legitimate trusts are established for legitimate causes.

Organizations that raise money for legitimate causes are owed the proper way for the funds to be deposited and handled. What you don't want is someone indicating that this a scam.