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Taking Care of Mom and Dad: Charity, Giving and Other Good Things Conclusion

If your parents have planned well and made good money during their working lives, they may have quite a bit of money when they're older and they may need your help in managing this money.

Often, when they get to their retirement age, people think about giving their money to charities or causes they support. The worst way for them to do this is by writing lots of checks to lots of groups. The best way is to set up some form of charitable remainder trust that allows them to use the income earned by their money now and leave substantial money to the groups they support when they are gone.

You can help your parents by advising them to look for tax-advantaged ways to give their money away. Of course, the mechanical details of trust accounts can fill many books; your parents should work with a lawyer or accountant when they're setting these things up. If they don't have one already, the charities that they intend to support can often make good suggestions.

If you're helping parents in this situation, keep in mind that trusts can work like annuities -- they can generate income for your parents now (in fact, many trusts use annuities to do this). The extra value of a trust is that it reduces or eliminates the taxes that can eat up your parents money...either while they're still living or after they're gone.

Remember and remind your parents that trusts can cause problems if badly drawn or excessively complex. A trust agreement doesn't need to be more than 10 pages long...and can usually be shorter than that. And it doesn't need to use any more technical language than what we've discussed in this chapter.

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