An estate is a legal entity designed to protect a person’s assets such as real estate, personal property, and funds after their death. Estates pay debts and distribute assets to the beneficiaries of the estate.
Trusts are legal entities created under state law and taxed under federal law. Trusts can be used similarly to estates in that they can protect the assets of an individual after their death and hold them in order to perform an act or a series of acts. Here, trusts typically have more acting power and can invest, deny distribution to beneficiaries if conditions are not met, and maintain as a legal entity until acts or objectives are met.
Tax-Exempt (Churches, Charities, Associations)
Churches, charities, and various associations are tax exempt. Filing as one of these organizations requires meeting conditions such as being not-for-profit.
Religious structures including temples, mosques, churches, houses of worship, and other organizations for religious-only purposes can file for tax-free status. To qualify, your organization must be part of a recognized organizes religion, have a mission statement and be formally organized as a distinct legal entity.
Non-profits include charities and various associations such as public charities, private foundations, employee’s associations, veterans’ organizations, business leagues, state-chartered credit unions, child-care organizations, retirement fund associations, and much more. These organizations must operate on a not-for-profit basis with a defined goal and mission statement. Organizations including corporations, trusts, LLC, and unincorporated associations can choose to register for tax-exempt status. Sole-proprietorships and partnerships or joint ventures cannot.