Make the Most of Your Gift Giving

About 70 to 80 percent of Americans contribute annually to at least one charity.¹ For some, this means pulling out their checkbooks when a need arises. Others take advantage of a planned-giving strategy that provides tax advantages and may allow them to contribute more.

With a little organization, you may be able to structure your philanthropic efforts so that they reap greater benefits — for you, your heirs, and your favorite charity. Two popular ways to structure planned giving are a charitable remainder trust and a charitable lead trust.

Charitable Remainder Trust (CRT)

A CRT allows you to make charitable donations without paying current capital gains tax on highly appreciated assets. You receive regular income from the trust during your lifetime or for a set period. You can use this income to boost charitable contributions, make additional investments, or increase your retirement income. The assets you transfer to the trust may be partially tax deductible, and any appreciated assets sold by the trust are exempt from current capital gains. Assets in an irrevocable trust may also be excluded from your taxable estate. Upon your death, the remaining trust assets are distributed to the designated charity.

Charitable Lead Trust (CLT)

A CLT is almost the opposite of a CRT. The designated charity receives any income generated by the trust during your lifetime, and remaining trust assets are distributed to your heirs when you die. Structuring donations this way can help reduce current income taxes due on trust income.

Bear in mind that not all charitable organizations are able to use all possible gifts. The type of organization you select can also affect the tax benefits you receive. The use of trusts involves a complex web of tax rules and regulations. You should consider the counsel of an experienced estate planning professional before implementing such strategies.

Charitable giving can help you pursue a number of goals. Call today to discuss your specific situation.

1) Giving USA, American Association of Fundraising Council, 2005

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