Planned Giving 2

Planned Giving 2

A major contributor to our organization would like to do more for us, but is concerned about taking care of children and grandchildren. What is the best method to use so this family can help us and still provide for the future of the family?


There are many ways a donor can benefit a charity and still provide for heirs. In many cases the donor can provide even a better result for his heirs as a result of a carefully crafted planned giving program to benefit a charity.

  • CRT -The donor could donate appreciated stock or real estate to a charitable remainder trust (CRT) and receive an annuity for life. The drawback of this technique is that the assets go to charity and not the heirs. However, in many cases if some of the cash flow freed up by the CRT is used to purchase life insurance (owned by a trust to avoid having it subject to estate tax) the heirs can actually get substantially more than they would have inheritted had no planning been done.
  • Charitable bail out - if the donor has a business to sell as he or she enters retirement, the CRT concept can be used with the sale of the business to potentially save substantial capital gains tax costs on the sale.
  • The next one is rather wild and wooly and impossible to explain in such a short space, but let's at least raise it. If the prospective donor is very wealthy, he or she might wish to combine estate planning and charitable giving. They could sell a large asset to a dynasty trust in a tax favored state like Delaware, Nevada, etc. The method of structuring the sale could inlcude a defined value clause to limit the tax exposure if the IRS succesfully challenges the valuation they use. This clause could pay over any excess amount to the designated charity (which charity should also get some gift in any event). Wild and complex but can benefit the charity and tremendously benefit the family.
  • A CLT or charitable lead trust is another ideal technique depending on all the facts. The donor would gift a larger amount of asstes to a CLT which would make an annuity (or unitrust) payment each year for a specified term to the designated charity. At the end of the term the heirs would receive the assets remaining in the lead trust, which if all goes as planned, should have appreciated consierably from the intial value of gifts made.

There are lots of options, but the best starting points are to find the prospective donor's heart-strings -- what do they want to accomplish (not just charitable goals, but all goal). Then evaluate those objectives in light of their unique assets, income, etc.

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