Charitable Giving Opportunities for Investors Part 4 of 4


Balance Giving Goals and Financial Planning

While the tax benefits associated with charitable giving help reduce the cost of making charitable gifts, an individual’s income or wealth transfer needs determine the ability to give. To address both goals, vehicles such as CRTs or CLTs are available.

A CRT can guarantee a lifetime income stream for a donor and a spouse, while minimizing current income taxes. Donors generally may deduct the fair market value of a charity’s remainder interest in the CRT during the year the CRT is funded. A CRT also can be an integral part of a family business succession plan. A donor can transfer stock to a CRT, and a closely held corporation may redeem the shares. The redemption funds the CRT with tax-free monies that subsequently can be invested to provide an income stream to the business owner and the spouse.

A CLT provides control over and enjoyment of a donor’s assets during the donor’s lifetime, an estate tax deduction at death equal to the present value of the charity’s future income interest, and a legacy to family heirs with potentially little or no estate tax consequences.

Including charitable giving strategies within your estate plan can be an effective way for you and your family to enjoy an income stream during your lives, earn tax savings, and maintain a significant degree of control over assets. Be sure to consult an attorney or a financial advisor who can help you identify the strategies that are most appropriate for your situation.