Compassionate and Comprehensive Planning for Individuals, Families and Businesses

General Gift Options

Many of us would like to do more to benefit the causes that we believe in or that have touched our lives.  Unfortunately, for various reasons, we put off donating because of financial and other concerns. 

 

Leaving Gifts Outright at Death

 

Whether through a trust or will, this simple donation is a gift to a charity upon death.  You can leave a specific amount, a specific valuable item, or a percentage of the estate.  The biggest advantage is that this gift is left after your personal need for the assets has ended.  As you plan, consider the total picture of what you are leaving.  If you leave a specific amount, it will likely be paid before your other heirs are considered. A percentage would most likely be paid at the same time as your other beneficiaries.

 

Making Gifts with Benefits

 

You can donate assets to a trust, which then distributes part of the assets and income according to terms you set.  You can designate that a charity receive benefits from the trust first, then what ever is left goes to non-charitable beneficiaries. This is called a Charitable Lead Trust (CLT).

 

You can also have the trust pay to beneficiaries (like children or friends) for a period of time, but the rest of the trust then goes to charity. This is called a Charitable Remainder Trust (CRT).  Both of these types of trusts can be created while you are living or through your will (testamentary).

 

Unlike an outright gift, these trusts allow you to benefit yourself or your loved ones while also making provisions for charitable causes that you want to support.   For example, a person could create a CLT under their will.  Assume that the total value of the estate is $100,000.   The percentages and numbers will vary, but for this example, the CLT will pay the charity for 10 years.  If the assets are invested and grow at 6%, and the charity is paid $5000/ year, the charity will receive $50,000 over the 10 years, and the other beneficiaries (children, grandchildren, etc.) will receive $113,000 at the end of the ten years.

 

If the desire is to have the children benefit first, then a CRT would work better.  Using the same example as above, the estate is put into a trust, which earns 6%.  The trust pays the beneficiaries $10,000 each year for 10 years, ($100,000 total) with the remainder going to a charity.  That remainder will be about $45,000.

 

In both cases, family is provided for, and receives more than if they received everything at death; while your favorite charity is also able to benefit.  You can even indicate what type of work you want your donations to benefit.  Too often, people postpone estate planning until it is too late, because they perceive the process as unpleasant.  When done correctly, estate planning gives you the option to give more, which makes the process pleasant and rewarding.