Focus On Charitable Estate Planning

A Guide to the Ways You Can Give to Your Favorite Foundation


The following are some suggestions that might help your charitable dreams come true. A financial professional, preferably one who is conversant with foundations, should verify the tax consequences of any gift. We are pleased to offer you this information, but only as an aid to permit you to ask the right questions of your favorite financial professional. This information is not an attempt to give you legal or tax advice. For more information, or if you have any questions, please contact us.


This is the process of working out, with an attorney, accountant, trust officer, life insurance agent, or other advisor, an orderly tax-wise arrangement for the disposition of your estate. The primary objective in any plan should be the fulfillment of your wishes regarding the security of your family and others that you wish to benefit. Tax consequences are an important part of estate planning and are often directly related to the accomplishment of your primary goals. Remember that many taxes can be avoided or minimized with proper estate planning.

The importance of working with professionals in estate planning and making a will or establishing a trust cannot be overemphasized. 




CHARITABLE GIFT ANNUITY (CGA) - In this case, the donor makes an irrevocable gift to a charitable organization in exchange for life income payments. A charitable gift annuity is a contract between the donor and the charity, under which the charity guarantees payment of the annuity, unlike a trust, which makes the payments from its assets alone. Two features in particular make charitable gift annuities appealing:

1.   Payments to Begin Now: An individual may specify that he or she wants an immediate annuity with payments to begin within one year from the date of the gift, or

2.   Payments to Begin Later: An individual may specify that payments are not to begin until a specified future date. In the case of a deferred gift annuity the return can be higher than current market rates.



CHARITABLE REMAINDER TRUST (CRT) - In return for the irrevocable transfer of cash or property to a trustee a certain percentage or amount of the annual income from the property is paid to you and/or another named beneficiary(ies) for life or for a specified term of years. The remainder interest in the property would then pass to a charity.  You would be entitled to a federal income tax deduction for the present value of that charitable remainder interest, which is based on the number and ages of life income beneficiaries and the percentage of payout you and the trustee agree upon. 

Some advantages of these charitable remainder trusts are:




Capital Gains Tax Postponed - If you fund the trust with appreciated property, you will postpone capital gain on the appreciation, and the trust will be funded with the full fair market value of the gifted asset.

Multiple Lives - You may designate anyone alive at the time of creation of the trust, including yourself and your spouse, as income beneficiary(ies).

No Taxes - The trust itself is not taxed.

Investment Decisions Left to Professionals - The burden of investment and management decisions regarding the corpus of the trust is removed. The trustee can purchase or retain securities to produce the maximum tax benefit for you and/or other beneficiaries.

No Estate Tax - The asset is essentially removed from your taxable estate.




Here are two examples of different types of Charitable Remainder Trusts:

Charitable Remainder Annuity Trust (CRAT) - These trusts provide that a specified dollar amount (at least 5% of the initial value of the assets at the time the trust is created) be paid at least once a year to the beneficiary(ies) for their lifetime(s) or for a term of years.

Charitable Remainder Unitrust (CRUT) - This type of trust provides that a fixed percentage (at least 5% of the current fair market value of the trust) is paid to the beneficiary(ies) at least once a year. The amount paid to the beneficiary(ies) will vary on a yearly basis according to the fluctuating value of the trust.


POOLED INCOME FUND (PIF) - These are trusts into which donors irrevocably transfer property, contributing the remainder interest in the property to their favorite charity.  Each donor is paid the annual income based upon the proportionate share of assets, which he or she contributed to the total fund property. 


CHARITABLE LEAD TRUST (CLT) - These trusts provide income, either a percentage or a specified amount, to the donor's charity for a specific number of years.  At the termination of this period, the principal is returned to the donor or others whom the donor has designated.

There are special handling requirements for CGA's, CRT's, and PIF's. Please contact your planned giving specialist for instructions.


In an endowment fund, the principal is invested, and only a portion of the investment earnings is spent.  The rest of the earnings may be reinvested back into the fund, so that the endowment grows over time.  In this way, the endowment becomes a perpetual source of funding for whatever the donor wishes to achieve.


Gifts of life insurance allow donors to make sizable gifts to their favorite charity at a relatively low cost.  To make such a gift, you would name your charity the irrevocable owner and beneficiary of a life insurance policy, then deliver and assign ownership of the policy to the charity.  When you gift to your charity the premium amount to pay the annual premium, you will be entitled to deduct that amount.  Gifts of life insurance policies may offer excellent estate-planning possibilities.  You may designate your charity as the primary, secondary, remainder, or residual beneficiary of a policy. There are a variety of policy options available. You will want to discuss your plans with our team of financial professionals.


Under a living trust, the management of a person's property is left to a trustee with instructions for distributions during the lifetime of the individual and at his or her death.  These distributions may include charitable gifts for the benefit of your charity.


This includes all gifts of real estate and tangible property.  In considering whether to accept the gift, your charity weighs its potential value and determines whether a management plan can be implemented to maximize that potential. In most instances, such a property will be sold; in other cases, it may be kept as an investment.  Many of the tax advantages that apply to gifts of appreciated securities also apply to gifts of appreciated real property. Before acceptance of any real estate gift, your charity must examine issues such as the mortgage burden, potential or outstanding lawsuits, environmental or other potential problems.


You may transfer a personal residence or farm to your charity while retaining a life estate (the right to use the property for the remainder of your life).  You are entitled to a federal income tax deduction for the fair market value of the remainder interest in the property at the time it is transferred.


A bequest is a very simple and uncomplicated way to help provide for the future excellence of your charity.  A bequest may be of a specific sum, a percentage, or the residue of an estate, and may consist of cash, securities, life insurance proceeds, real estate, and/or personal property.  A bequest may be made through a will or by a living trust, and should be directed to your charity.b A carefully planned and drafted will can preserve a maximum amount of an estate for the surviving members of one's family and others whom one wished to benefit.



Remember that you can donate anything of value to your charity and receive a tax-deductible receipt.

Cash is an obvious gift, but have you thought about deducting a regular amount through your credit card?  You can arrange that monthly, quarterly, or yearly payments are processed automatically from these accounts.

Valuables - Here is a list of items that you may currently own and not know what to do with them. Consider donating them to your charity, instead of allowing them to collect dust in your attic, safe deposit box or storage space:

  • Gems
  • Paintings
  • Precious Metals
  • Boats
  • Computers
  • Furniture
  • Valuable artifacts
  • Antiques
  • Vehicles
  • Medical Equipment & Supplies
  • Real Estate
  • Jewelry
  • Interests in Land
  • Buildings
  • Trucks
  • Silver
  • Printers
  • Automobiles
  • Office Space
  • Artwork
  • Houses
  • Stamp Collections
  • Gold
  • Coin Collections