Get Something in Return
Americans give freely to support the causes they value, from
churches, education, and the arts to medical research.
Charitable giving in the United States has climbed to nearly
$250 billion a year, and 70 to 80 percent of Americans
contribute annually to at least one charitable organization.1
Fortunately, current tax laws encourage and even reward
philanthropy beyond your basic tax deduction. It’s possible that
one or both of the following types of trusts could provide
meaningful Financial advantages, in addition to the personal
satisfaction that comes from giving.
Charitable Remainder Trusts
When money, securities, property, or other assets are placed
in a properly structured charitable remainder trust, the donor
or a beneficiary receives income for a specific term or for
life. When the trust expires, the designated charity receives
the assets that remain.
For the donor, there are several potential tax benefits.
Assets placed in the trust may be partially deductible for
income tax purposes. At death, trust assets are not subject to
estate taxes because they are no longer part of the donor's
taxable estate. Finally, any appreciated assets in the trust are
also exempt from current capital gains tax.
Charitable Lead Trusts
A charitable lead trust is an estate conservation tool that
uses your assets to provide income for a charity during your
lifetime, and then transfers the remaining assets to your heirs
when you die. This could potentially reduce the estate tax due
on the assets in the trust, most notably on highly appreciated
assets, because they are not subject to current capital gains
tax.
Keep in mind that donations to both types of charitable
trusts are irrevocable; therefore, the assets cannot be
withdrawn once the trusts are formed. Also bear in mind that not
all charitable organizations are able to use all possible gifts.
It is prudent to check first. 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 and your legal and tax advisors before implementing
such strategies.
When structured properly, these tools could possibly be used
to benefit the charities of your choice and reduce your tax
obligations at the same time.
From:
David Waters
Phone: 215.875.8790
1) American Association of
Fundraising Counsel, 2005
