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The law permits charitable planners to divert tax dollars to worthy causes more aligned with their values. Charitable organizations can be an important motivation and organizing principle of an estate plan.


Charitable Giving and Estate Planning Explained

Focus on Giving 


The focus of Penbay estate planning attorneys is on protecting the family through excellent estate planning. We also believe in giving back to our community in the form of volunteer hours and monetary donations. We understand and are versed in the planning techniques partially or wholly motivated by a desire to benefit a charitable cause. Charity and worthy causes can be an important motivation and organizing principle of an estate plan. But like any other legal technique, charitable giving needs to be accomplished in a skilled legal manner. Depending on the client’s wishes, it can play a major role.

Taxes and Charitable Giving


A Constitutional Right to Give

One of the gratifying things about charitable giving is that it is an opportunity for the giver to decide how public money is spent. Your charitable giving, if done right, can divert what would otherwise be tax money, to a charitable cause or public good aligned with your own values. While ordinarily citizens do not have much say in how their tax dollars get spent, in accordance with the law, this is one opportunity where the citizen can decide. Through the use of various trust provisions utilizing the IRS code, and the laws of the states, we can create the most tax efficient plan for charitable giving.

One such plan allows the giver to get income from a highly appreciated asset in return for a remainder interest that will go to the charity when the giver dies. This is an extremely useful planning technique for when the capital gains income tax burden of selling the asset makes it prohibitive, but the asset has income producing potential. Charitable-minded planners with highly appreciated assets should look into the idea of a Charitable Remainder Trust.

Additional Issues For Charitable Giving

Charitable Lead Trust

CLTs Remainder to Your Family

Charitable Lead Trusts. A Charitable Lead Trust or CLT is a way to give the remainder of valuable assets to your own family or beneficiaries. But during a set term of years, the CLT provides an income stream to a chosen charity.

Charitable Remainder Trust

CRT Income For Life Plus Eliminate Capital Gains

A Charitable Remainder Trust or CRT is another planning option where a charity will benefit, and the planner will get a tax benefit. The CRT or charitable annuity gives the donor an income tax deduction plus a stream of income for life. But it also waives the capital gains taxes owed on the contributed property when it is sold. Highly appreciated assets, such a securities, or stock, or in deed, any highly appreciated asset, or something that has a much greater value now than when it was acquired and would result in substantial capital gains income tax if it were sold, work well with a Charitable Remainder Trust.

Private Foundation vs Donor Advised Fund

Foundations Play a Major Role in How the Money is Spent

Another planning option is a donor advised fund. Such a fund operates like a private foundation. However the family or donor has less obligation to report or administer the charitable gifts.
A private foundation gives the donor the ability to have a great deal of control over the manner in which the charitable gifts are used by the charitable donees. However, with a private foundation the foundation itself is required to comply with complex administrative and reporting requirements.


For the charitable minded planner, the planning opportunities are interesting and varied, but also complex.


2017 Charitable Giving in the US in Billions of Dollars


Percentage of People Who Should Have an Estate Plan


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