How Do I Create a Charitable trust in Oregon?

Full question:

What documents do I need to setup a two part system. One side holds assets in trust for beneficiaries and never takes risks. The other side takes risks (can operate business to make money). I want to set this up in a way that allow people to make tax deductible charitable donations of real estate, financial assets, or other property to the no risk side. For example, I would like to put our assets in the no risk trust and have the risk taking side give its income to the no risk side. The affect of the donation of income would be to eliminate income tax on the risk taking side because it gives away all or most of its income. If the risk taking business(s) fail, they can be resolved, but the main real estate and financial assets are safe in the no risk taking side.In further example, the beneficiaries and trustees may belong to an association with common ethical beliefs such as care for the earth or land, care for people, share surpluses.Also, the no risk trust would own the land, but the beneficiaries who are association members can rent or lease housing from the trust.The intention of the no risk side is as an educational institution for public benefit, much like a university. Our focus could generally be called environmental education and restoration. The risk taking side would set businesses that follow our educational intent such as offer courses, possibly accredited, offer consulting, land purchase and restoration, etc. The trustees may be corporate trustees to add an additional line of insulation.Also, what would be the legal institutions relation to the trusts, who owns who? Who sets up the Form1023 501C3 and Oregon nonprofit corporation.If you do not have a fit, can you point me to a link(s) that would be helpful to me in this effort.

• Category: Trusts
• Date: 04/07/2025
• State: Oregon

Answer:

In order to establish a basic living trust, the Grantor should prepare and execute a document called a declaration of trust, which is similar to a Last Will and Testament. The declaration of trust sets forth the terms and conditions of the living trust. In the document, the Grantor names himself or herself as trustee, and transfers assets to that trust . Because the Grantor is named as the trustee, he or she maintains full control over the assets.

After creating the living trust, the grantor should transfer personal assets into it. This is referred to as funding the trust. In order to transfer real estate into the living trust, a real property deed naming the living trust as grantee should be executed and recorded. Bank accounts, retirement accounts and life insurance policies can be also be transferred to the trust. A warranty deed or quit claim deed is commonly used to transfer real property to the trust.

A charitable trust is used to make donations and realize tax savings for an estate. Typically, there is a transfer of property such as art or real estate to a trust which continues to hold the asset until it is transferred to the charity, usually after your death. The donor can continue to enjoy the use of the property, then the charitable gift may be deductible for estate tax purposes.

A land trust aims to protect the lands and waters that define our communities and enrich our quality of life. A land trust may accomplish this through establishing and monitoring permanent conservation easements. Conservation easements are legal agreements by which landowners voluntarily limit the development potential and use of their land. The land remains in existing ownership but the easement "runs with the title" insuring that the protections remain in place regardless of who may own the land in the future.

A land trust works with landowners to protect the natural values of their property and ensure that the scenic beauty of the area will be maintained for future generations. The protected property may be donated by land owners, or the trust may purchase property. A land trust's legal and real estate specialists work with landowners, government agencies, and community groups to:

•create urban parks, gardens, greenways, and riverways
•build livable communities by setting aside open space in the path of growth
•conserve land for watershed protection, scenic beauty, and close-to-home recreation
•safeguard the character of communities by preserving historic landmarks and landscapes
•generate federal, state, and local conservation funding
•promote the importance of public lands.
Another type of land trust is allowed in some states. It is a revocable, living trust primarily used to hold title to real estate for privacy and anonymity. The owner of the land can transfer title to a land trustee and specifies who will be the beneficial owner and who will have the power of direction over the trust. The beneficial owner has the right to use the land. When real estate is held in a land trust, however, only the land trustee’s name is made public – not that of the trust’s beneficiary. Unless forced to do so by a court order or statute, the land trustee will not disclose this information to anyone.

The holder of the power of direction has the right to instruct the trustee in title transactions, such as directing the trustee to transfer a deed or mortgage to someone. Typically, the beneficial interest and power of direction remains with the original owner. Unlike a regular trustee who acts according to the rules set forth in the trust, the land trustee acts only according to the direction of the holder of the power of direction.

A real estate investment trust (REIT) is a corporation whose primary business is owning, developing, and managing real estate properties, such as apartment buildings, office buildings, hotels, warehouses, health care facilities, shopping malls or golf courses. While many REITs invest directly in these properties, some types of REITS can also invest in real estate related loans, such as mortgages. A hybrid type of REIT can invest in a combination of real properties and mortgages. Structurally, a REIT is set up as a company, shares of which may be purchased by investors. REITs allow shareholders to invest in a professionally-managed portfolio of real estate properties.

REITs qualify as pass-through entities, companies who are able distribute the majority of income cash flows to investors without taxation at the corporate level (providing that certain conditions are met). As pass-through entities, whose main function is to pass profits on to investors, a REIT's business activities are generally restricted to generation of property rental income. REITS are a relatively liquid investment since its shares are primarily traded on major exchanges, making it easier to buy and sell REIT assets/shares than to buy and sell properties in private markets. REITs also receive special tax considerations, and typically offer investors high yields. An additional benefit to investing in REITs is that many have dividend reinvestment plans (DRIPs) available.

We are prohibited from giving legal advice, as this service provides information of a general legal nature. I suggest you consult a local attorney who can review all the facts, documents, and tax implications involved. We can assist you with searching to locate forms or we can draft and add forms you may need to our database. However, we cannot advise you to use one particular form over another. We can show you what is available. Please see the forms at the links below to see if they meet your needs or let us know if you would like us to draft a form to meet your needs. You may order forms online or by phone by calling Toll Free: 1-(877) 389-0141 - 8:30-5:00 Central Time Zone Monday – Friday.

Please see the following OR statute regarding non-profit corporations:

65.044 Incorporators.

One or more individuals 18 years of age or older, a domestic or foreign
corporation, a partnership or an association may act as incorporators of
a corporation by delivering articles of incorporation to the Secretary
of State for filing.