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Estate Planning/ Charitable Giving

"You have been accumulating your wealth for years. But did you realize that much of it could be lost to taxes when your estate is probated?"


Estate Planning

We all have personal reasons for giving to charity, but at the core of our intention is a common desire to share our good fortune with others. You may have the capacity and desire to give, but may need help in determining the most effective way to leave a lasting legacy. We can help you customize a giving program to meet your goals.


Effective Giving Techniques

Personal and family foundations are a popular tool to responsibly and effectively transfer wealth from your estate to the charities you select. Foundations can be established to enable you and your family to give strategically over the years, building a lifelong commitment to philanthropy.

A charitable remainder trust is another alternative that lets you defer capital gains taxes on highly appreciated assets, such as stocks and real estate. Planned gifts through a charitable remainder trust can reduce your estate taxes, provide an immediate charitable income tax deduction, increase your spendable income and protect your family's financial future.

Planned giving strategies can help you transfer substantial assets over a period of years without triggering the federal gift tax. Lifetime gifts can also be one of the most effective ways of minimizing estate taxes.

Charitable giving not only benefits those in need, but also brings you and your family personal satisfaction. Good deeds endure long after financial benefits are realized.


Top 5 Reasons Why People Give

  1. Because they are asked
  2. Compassion for those in need
  3. Personally believe in the cause
  4. Affected by the cause
  5. Give back to the community


Create a Lasting Legacy of Giving

Relatively unheard of a few years ago, donor-advised funds are now one of the fastest growing forms of charitable giving. In 2006, The Chronicle of Philanthropyfound that donors contributed $6 billion to donor-advised funds—a 25% increase over 2005. Simple, cost-efficient and flexible, donor-advised funds are becoming a popular form of giving and should continue to play an important role in overall financial and estate planning.

Donor-advised funds are charitable giving vehicles that are established by a sponsoring public charity, which makes grants to other charitable organizations based upon the donors’ recommendations. The sponsoring charity handles all of the administrative details, enabling the donors to focus their attention on the more enjoyable effort of creating a lasting legacy by supporting their favorite charities and passing on their family values to children and grandchildren.

Donor-advised funds are easy to establish—typically, completing a short application is all that is required. Donors can then begin making irrevocable contributions to the charity’s donor-advised fund accounts, take the maximum allowable tax deduction and begin recommending grants on their timetable.


Hands-on Philanthropy

Donor-advised funds allow donors to contribute to multiple charities throughout the year—providing donors and their family members with the opportunity to actively participate in researching and recommending which charities should receive grants, as well as the amount and timing of those grants. This "hands-on" capability is one of the reasons donor-advised funds continue to grow in popularity. More and more individuals want to have a say in how their charitable contributions are utilized on an ongoing basis.

A donor-advised fund can also allow donors the option to remain anonymous. For a variety of reasons, donors may wish to have a buffer between themselves and the charity receiving the grant. The sponsoring charitable organization can make the contribution while the donor remains in the background to suggest the amount and the recipient.


A Valuable Tax Management Tool*

Because donor-advised funds are the property of a tax-exempt organization and, as such, are generally not subject to annual taxes, assets grow at a faster rate—which means clients can donate more to their favorite charities. In addition, donor-advised funds may enable donors to avoid potential estate taxes and help manage an inheritance for future generations.  

Identify the Right Charitable Giving Strategy

As with any investment plan or strategy, donor-advised funds may not be right for every client. Because each sponsoring charity is responsible for the fiduciary oversight of its donor-advised fund program, including the approval of all grant recommendations, sponsoring charities may impose a number of restrictions on a donor’s ability to make grants. Donors may be restricted from giving to charities outside their local community or to charities with certain values or objectives. In addition to restrictions on grants, investment choices can also vary greatly among donor-advised fund programs. Some may require the donors to select from the investments offered through the sponsoring charity’s program, while others can allow the donor’s investment advisor to be involved in the management of the assets in the donor-advised fund. Additionally, while some donor-advised fund programs allow donors to appoint successor advisors, others do not.

A donor-advised fund satisfies many of the same goals and values that lead individuals to establish a private foundation, but without the associated costs, legal fees, annual excise taxes, minimum payout requirements, and loss of privacy.

Deciding whether a donor-advised fund is appropriate will depend on each client’s particular financial situation and objectives—clients should consult with their legal and tax advisors to determine if a donor-advised fund is appropriate for them.

Contact us today for a no-obligation analysis of your estate planning alternatives.

Source: National Philanthropic Society

The information presented in this document is for informational purposes only and should not be construed as either tax or legal advice. Readers should consult their tax or legal advisor regarding their specific situation.

*Not Legal or Tax Advice.