The American public continues to be generous to their favorite causes. It is estimated that over $200 billion was given to charities in 2007. Along with enabling their favorite charities to continue their good works, many include charitable giving as part of their overall income tax and estate planning strategy. This article identifies some of the issues you may want to consider as you plan your charitable giving activities. You should always make sure the charities you are considering are legitimate and you should consult with your financial, tax and legal ADVISOR.
There are straight forward charitable giving strategies ard more sophisticated trust strategies that some individuals use – charitable remainder trusts and charitable lead trusts. With a charitable remainder trust, a donor contributes property (usually money, securities or real estate) to a special form of trust. During the donor’s lifetime or some period, the income from that property is distributed to the donor. On the donor’s death or at the end of the specified period, the remainder goes to the charity.
With a charitable lead trust, the effect is the opposite. The charity gets the income for the lifetime of the donor (or some period) and the remainder goes to the donor’s estate or some other beneficiary at the end. These types of trusts are complicated to set up and administer and usually only used as part of a sophisticated estate plan by wealthier individuals. Qualified legal and tax assistance is a must.
