Charitable and Philanthropic Planning
Whether you're already giving to charity or you would like to start giving, we can help make your gift go farther.
What is Planned Giving?
Planned giving is the use of advanced estate planning techniques to get more out of the giving you're already doing. By committing now to future giving, you can create additional value for your charities and secure your own financial situation.
What Planned Giving Can Do For You
These are just some of the possible benefits you could get with planned giving:
- Income tax deduction for a charitable gift
- Estate tax deduction for a charitable gift
- Avoid capital gains taxes by donating appreciated property
- Make a gift to charity without losing the income from your investments that you need for living expenses
What Planned Giving Can Do For Your Charities
Your charities can also benefit from planned giving by way of:
- Increased certainty for the charity. The charity can prepare much more reliable budgets when it knows in advance about future gifts.
Charitable Remainder Trust
When you create a charitable remainder trust (CRT), you give cash or assets to the trust. The CRT property is then sold or generates income. That income is used to pay you (or other beneficiaries of your choice) income for a number of years. At the end of the period, the remaining trust property is given to your charities at the end of that period.
You will receive an immediate charitable income tax deduction when the CRT is created, even though the charity won't receive its gift for many years. The charitable deduction will be less than the amount you transfer to the trust because you get some of that money back each year.
The structure and duration of payments determines the size of the charitable deduction – and there are many possible variations. Payments can be made for a specific number of years or for the life of one or more people. The annual payments can be fixed, based on a percentage of the assets, or based on the net income of the trust.
A CRT is best used to remove appreciated property from your estate. You will still pay taxes on the income you receive. But the remainder will pass to the charity free of taxes.
Charitable Lead Trust
A charitable lead trust (CLT) is in many ways the opposite of a charitable remainder trust. The CLT pays a charity income for a set number of years. A common form of CLT pays a fixed amount every year – an annuity – and is called a charitable lead annuity trust (CLAT). Then the remaining trust property is distributed to your beneficiaries.
Unlike the charitable remainder trust, the charitable lead trust doesn't give you an income tax deduction. Instead, the CLT makes the gift to your beneficiaries count as a much smaller gift (or as no gift at all) for gift tax purposes. If the term of years is long enough or the annual gift to charity large enough, the gift to your beneficiaries can be entirely tax free.
A charitable lead trust can be very effective with property that will either produce significant income or appreciate rapidly in the future. The CLT allows you to pass that income or growth onto your heirs tax free, at the expense of
Other Planned Giving Options
Charitable remainder trusts and charitable lead trusts are two of the more common planned giving tools, but there are many others. For example:
- A charitable gift annuity works very similarly to certain types of charitable remainder trusts.
- A charitable life estate allows you to give your home (or other property) to a charity while retaining the right to live there.
- A family foundation (or private foundation) allows you to make charitable gifts while staying involved with how that money is spent on philanthropy for years to come
Making Planned Giving a Part of Your Life Story
Planned giving usually isn't as simple as replacing a charitable gift with a similar gift to a CRT or CLT. To get the most benefifit for yourself and your charities, we need to analyze your complete financial situation and your goals – both personal and philanthropic.
Call us at (888) 909-1414 or contact us online to discover what planned giving can do for you and your charities.