Gevurtz Menashe

PDX 503.227.1515
WA 360.823.0410

Charitable Planning

Estate Planning
Charitable gifts can take many forms and can yield substantial tax advantages if made properly during one’s lifetime or at death and Gevurtz Menashe estate planning attorneys have experience in helping our clients make charitable gifts of many sizes and variations. If you’re interested in learning more about charitable gift planning, and how it may affect your estate plan, call 503-227-1515 or contact us online to schedule a consultation.

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Charitable Gift Planning attorneys

Types of Gifts & Trusts

Charitable gifts can take many forms and can yield substantial tax advantages if made properly during one’s lifetime or at death. Direct contributions of stocks, bonds, real property, or even personal property not only provide income tax deductions, but they can also help reduce or eliminate taxable gains. For larger gifts, the use of a charitable lead trust, charitable remainder trust, or gift annuity can provide similar estate and income tax benefits and, at the same time, preserve an income stream to the donor or the donor’s loved ones.

It is important to remember that any charitable giving depends on the tax-exempt status of the charity in question. The charity must be a non-profit organization that operates under the 501(c) designation as defined by the IRS. Not all non-profit organizations have their 501(c) designation, however. You will want to be sure to confirm an organization’s status prior to making a sizable donation, particularly if you anticipate claiming a tax benefit from the donation.

Charitable trusts are specific types of trusts which earmark certain assets for charitable giving. They are most often used by individuals who would like to minimize or avoid estate taxes while benefiting a specific charity. The two most common types of charitable trusts are charitable lead trusts and charitable remainder trusts. 

Lead Trust vs. Remainder Trust

A charitable lead trust, also known as an annuity trust, provides that a fixed amount or percentage of the trust’s assets are to be distributed to a charity for a term of years or, less common, for the life of an individual. The donor, or creator of the trust, determines what the term and the percentage rates will be. The trust provides numerous income, gift, and estate tax benefits depending on how it is structured.

After the trust’s term expires, the trust ends, and whatever trust assets are remaining pass to the beneficiaries named in the trust, such as to the donor’s children. There is no guarantee there will be any assets remaining for the beneficiaries when the trust ends, such as if the trust investments underperform and all the assets are paid to the charity during the trust’s term. However, if the trust’s investments perform well, any appreciation will pass to the beneficiaries free of any estate tax.

A charitable remainder trust is often considered to be the inverse of a charitable annuity trust. The charitable remainder trust provides a fixed percentage or amount of trust assets are to be distributed to an individual for a specified term, with the remaining trust assets passing to a specified charity at the end of the term. These trusts provide the donor with numerous tax benefits such as income and gift tax deductions for the initial contribution to the trust as well as avoiding capital gains taxes on appreciated assets sold in the trust.

Gift Annuities and Direct Gifts

A charitable gift annuity is a way for a donor to give value, while receiving (or giving) income, but also enjoying a tax benefit. These are not trusts, but rather contracts directly with the charities. The charity receives assets from the donor and agrees to distribute a certain amount of money to an individual (either the donor or someone else) for that individual’s lifetime. The charity uses a portion of the initial gift to fund the annuity payments to the individual and uses the remaining assets for its charitable purposes.

A donor can also consider donating low basis equities directly to a charity which avoids incurring the obligatory capital gains tax for the donor. The charity can sell them, free of capital gains tax, and use the proceeds to set up the annuity described above. Further, the donor can receive a tax deduction when the annuity is created. This deduction is based on the donor’s life expectancy and the anticipated income stream from the annuity.

Gevurtz Menashe estate planning attorneys can help.

Gevurtz Menashe estate planning attorneys can help structure charitable strategies to ensure the maximum benefit to you, your loved ones, and the charity itself. If you have questions or are interested in learning more, call our Portland office at 503-227-1515, our Vancouver office at 360-823-0410, or schedule a consultation online.

Call our Portland, OR offices at: 503-227-1515
and our Vancouver, WA office at 360-823-0410
or contact us to request a consultation.