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Planned giving: What it is and how to do it right

On Behalf of | Mar 30, 2017 | Trusts |

Individual charitable gifts play an important role for most nonprofit organizations. Luckily people in Colorado are generous. In a 2014 study conducted by the Colorado Nonprofit Association 80 percent reported giving to a charity within the previous year.

Planned giving is a term that includes making gifts during your lifetime, but also includes establishing a philanthropic legacy. Because of this, charitable planned giving is often intertwined within the broader estate planning context.

Benefits of a Charitable Remainder Trust (CRT)

Each family has different circumstances and for those with assets that have appreciated a CRT might provide an option. This type of trust may allow you to limit capital gains or estate taxes and at the same time leave a significant gift to a charity.

This irrevocable trust can provide income to you or a spouse or child for over the course of a lifetime or during a set term (25 years). At the end of either period, the trust funds would then flow to the charity or charities that you have chosen.

This type of trust could work well for a farmer or rancher who is retiring and does not have the expenses to offset income from a crop or livestock sale. Those who own family businesses can often utilize a CRT when considering the potential sale of a company. An appreciated stock portfolio could be moved to more income-producing assets within a CRT to avoid significant capital gains.

Deciding which cause to support

This can be an easy decision. If you have volunteered for decades with an organization, you may want to ensure that it has the resources to continue into the future. Or you may want to leave a lasting gift to your church, synagogue or other religious organization.

In contrast if you have supported a wide range or causes or are only recently in a position to make a gift, the choice can be more difficult. You may want to set up meetings with nonprofits you are considering to learn more about their needs and how you might help.

While a charitable legacy is on your mind, set up an appointment with an estate planning attorney to ensure you structure the gift in the best way possible.