Charitable Planning

If you are like most people, you like to donate money to one or more charities that are close to your heart. Many people have given to the same types of charities for years, so it makes sense that they would want to leave them one final gift from their estate when they pass away.

If this makes sense to you, we can help you tailor your estate plan to achieve the following:

  1. Benefit your favorite charity or charities, in a way that would still allow you to retain a form of control over gifted assets, and/or
  2. Allow you to create an income stream to your favorite charity with a remainder of funds going to your family beneficiaries.
  • Options for Charitable Planning

    Understanding ways to leave money to a charity and at the same time take an advantage of tax deduction is key:

    • Charitable Lead Annuity Trust (CLAT) – A CLAT entitles a charity (or charities) to payments, for a set period of time (lead period) that you choose, from assets you give to the trust. When trust terminates at the expiration of the lead period, any assets left in the trust (remainder) go to beneficiaries you identified when the trust was created. There should be no gift or estate taxes on the transfer of those assets when they go to your beneficiaries.
    • Charitable Remainder Annuity Trust – is a trust, which lets you convert a highly appreciated asset into income stream without paying capital gains tax. It works as an annuity for your benefit during your lifetime and, at the end of the trust or at your death, all the remainder goes to a specified charity of your choice. Charitable remainder trust is income tax-exempt.
    • Charitable Remainder Unitrust – is a trust that is similar in its function to a charitable remainder annuity trust, but it distributes a fixed percentage of the value of its assets (on an annual or more frequent basis) to a non-charitable beneficiary; and at the end of the trust period or the death of the settler, the remainder goes to a charity of the settler’s choice.
    • Private Foundation – A private foundation is a nonprofit organization that is not a public charity. It is often created by a single primary donation from an individual or a business and whose funds and programs are managed by its own trustees or directors.
    • A donor-advised fund – is a structure created and maintained in “custody” of public charity. It allows donors to make charitable contribution, receive an immediate tax deduction and stretch the control over the grant’s distribution over time by having an ability to direct distributions from the fund for certain causes and to certain organizations.

    Our team will work with you to make the right decisions based on the amount you want to leave to a charity, and any specific requirements you may have in mind.

  • Why create a CLAT

    • You can structure the CLAT to give you an immediate income tax charitable deduction, which can help reduce the tax bill associated with extraordinary taxable events (e.g., the sale of a business).
    • You can “freeze” current asset valuation for estate and gift tax purposes. If your assets continue to appreciate, your heirs would receive any appreciation free of death taxes.
    • Assets that may grow free of income and capital gains tax if the CLAT is structured as a grantor trust—you would pay the tax on the income earned by the trust. This allows you to leave more to heirs and have a smaller taxable estate.
    • Ability to manage the investment of the assets during the lead time and to run the investment portfolio for the best performance and growth.
  • Setting Up Charitable Planning

    If you have highly appreciated assets and interested in income tax planning with those assets, reach out to us to discuss different charitable vehicles available to you. If you would like to make charitable planning a part of your estate plan, we can help you every step of the way. Get in touch with us to schedule a meeting where we can go over your desires for your charitable giving, and get it taken care of right away so you don’t have a thing to worry about.