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Tax Planning

Giving to charity is a deeply person thing. People give for many reason’s, whether to support a cause, or as thanks. Institutions of art, science and education are often supported by charitable contributions. The lives of many successful individuals were aided at key points by such organizations, and so the cycle of funding continues when they give back.

The current tax code offers incentives for gifting assets or incomes to charity. Tax deductions are given for current contributions, for estate owners, charitable gifts can reduce the size of the estate, and help minimize estate taxes.

Understanding the benefits of properly structured charitable gifts can provide significant benefits for the chosen charity and also for the donor. Charitable gifting can allow the donor to benefit from an asset whilst also contributing to a charitable endeavor. Many wills include a charitable beneficiary to benefit the organization after the individual dies.

Contact us today to find out more about the benefits of charitable giving.

Charitable Remainder Trust

A charitable remainder trust allows the donor to transfer assets, yet keep the income they generate. The asset becomes the “remainder” which is charitably owned. Remainder trusts, when properly structured, can qualify for a tax deduction. There are three types of remainder trusts:

Unitrust: A unitrust the income the donor receives is based on a percentage of the current fair market valuation of a trust asset. Each year, as the asset is valued, the income is adjusted based on the new valuation.

Annuity Trust: Instead of a percentage of the asset value, the donor is paid a fixed amount annually.

Pooled Income Fund: Donors can pool their donated assets in a fund that is operated by the charitable organization. The donors then receive a proportionate share of income from the fund that is paid throughout their lifetime. Payments can vary each year based on the valuation of the underlying assets in the fund.

Donor-Advised Fund

A donor-advised fund is like a charitable investment account, for the sole purpose of supporting charitable organizations you care about. When you contribute cash, securities or other assets to a donor-advised fund at a public charity, you are generally eligible to take an immediate tax deduction. Then those funds can be invested for tax-free growth and you can recommend grants to virtually any IRS-qualified public charity.

The complexities of such an arrangement are best discussed with a qualified tax or financial professional.

Contact us today for more information on charitable planning.

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