Around the Corner: Year-End Giving

In a little over a month trick-or-treater’s will excitedly be lining the streets. After that, it’ll be time to give thanks with our loved ones for all that we are grateful for. We then will join together in celebration of the holiday season.

Basically, you may blink your eyes once or twice and 2013 will have arrived.   

We are approaching the time where individuals will begin to think of their year-end gifts to the charities that mean most to them. It is important to keep the following charitable options and their benefits in mind:

Charitable Gift Annuity

A contract is made between you and a charitable organization.  A gift is given to a single charity and up to two beneficiaries will receive fixed, partially tax-free income payments for life (jointly or successively). As the donor, you will remove taxable assets from your estate and receive a deduction for the gift portion of the asset. Typical gift size minimums for a CGA are $5,000 or $10,000 but organizations will vary. 

Donor-advised Fund

This is a charitable giving vehicle that allows you to make an irrevocable, tax-deductible gift to a charity. In exchange, DAF’s provide you the opportunity to create a legacy and the ability to recommend grant distributions that can benefit multiple qualified charitable organizations over time.  It is simple in the fact that you will immediately receive a single tax deduction when your contribution to the DAF is originally created. Typical gift size minimums for a DAF are $5,000 or $10,000 but organizations will vary. 

Charitable Lead Trust

This vehicle makes payments to the charity for life or a period up to 20 years with the assets ultimately passing to you or your heirs at the remainder of its term. Gift and estate taxes are reduced for the assets that are passed to heirs and there is also a lower income tax liability. This is ideal for assets that are expected to appreciate quickly. CLT’s are currently popular with the low AFR rate because it is utilized to minimize federal transfer taxes. This vehicle will require your attorney to draft the trust document and your professional counsel should be involved in this process. Typical asset size minimums for a CLT are $100,000.

Charitable Remainder Trust

This vehicle either pays fixed (annuity) or variable (unitrust) income for life or a term up to 20 years. There are significant income and estate tax advantages such as no capital gains tax on appreciated property that is transferred to the trust and the donor is able to deduct the present value of the charity’s remainder interest. Ultimately, the assets will benefit the charity. This vehicle will require your attorney to draft the trust document and your professional counsel should be involved in this process. Typical asset size minimums for a CRT are $100,000.

Before making any gift, it is always strongly encouraged to consult with your professional advisors and knowledgeable philanthropic coaches to ensure you are strategically meeting your charitable and financial goals.

If you are interested in a charitable remainder trust, charitable lead trust, or charitable gift annuity, CTAC would be happy to run a sample illustration for you. Please contact Kristen Schmidt via telephone at (800) 562-2045 or by email at kschmidt@ctacadmin.com.

By: Kristen Schmidt, Marketing Coordinator

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