Charitable Remainder Trusts

The benefits provided by charitable remainder trusts are numerous. First, you receive a partial income tax deduction for your donation, based on the market

value of the property which your selected charitable organization will ultimately receive. This value is also removed from the total value of your estate, meaning that your family will not be required to pay estate taxes on this amount upon the event of your death. Also, you will receive a lifetime income stream in return for your donation, which may in some circumstances even be greater over time than the value of the property which you originally contributed to the trust!!

Charitable Lead Trusts. With a charitable lead trust, the effect is the opposite of a charitable remainder trust. In this case, the donor contributes property to a trust. However, during the donor's lifetime (or other specified time period), the income from the property held in trust is distributed to the donor's chosen charitable organization. At the close of the specified time period, the remainder of the property held in trust is transferred to the donor's estate or the donor's other named beneficiary (e.g., his or her children). For charitable trusts, qualified legal and tax assistance is required to achieve your desired outcomes.

Family Foundations. Family foundations can be nonprofit corporations or trusts and may be formed to administer gifts for the benefit of one or more particular groups, causes, or organizations and should not be mistaken as charitable giving methods only to be utilized by wealthy individuals and families. A family foundation can provide stability and continuity for the groups and organizations it serves. Parents with strong philanthropic goals can pass this legacy on to their children through the use of a family foundation. A family foundation can create incentives for family members to make charitable gifts and bequests by: (i) giving a family name a place in the philanthropic history of the community; (ii) providing efficient management of investment funds; (iii) providing income tax benefits associated with making charitable gifts; and (iv) providing flexibility to meet the income and other important needs of donors.

Conclusion. Charitable contributions are critical to many worthwhile organizations in carrying carry out their missions. Donors benefit from: (i) the ongoing operations of their selected organizations; (ii) from the emotional satisfaction which develops naturally with gift giving; and (iii) the income and estate tax benefits achieved through their gifts. Federal and State tax laws are structured to encourage individuals to make gifts to charitable organizations, and there are many, many ways to maximize the income and estate tax benefits of making gifts to such entities. To learn more about the advantages of charitable donations, you may feel free to contact us directly.