Charitable Gift Planning

A bargain sale can be made to a charity, institution or organization, allowing you to make a substantial contribution to charity while getting some of the value of the property back. Bargain sales happen when you sell the property to a charity for below the fair market value.

A bargain sale might be the right choice for donors who want to donate specific property but can’t sacrifice the property’s full value. A bargain sale can allow you to help a worthy cause while still providing you with some of the property’s value and significant tax savings.

KJK’s Estate Planning attorneys can help negotiate the sale agreement between you and the purchasing charity or institution, reach the final sales price and complete the transaction in an efficient manner that protects both the donor and the recipient.

Charitable gift annuities start with a contract between the donor and the recipient organization. In return for your gift, the recipient organization agrees to pay you a fixed amount for the rest of your life. You make a one-time gift and receive a fixed amount of income for life.

There are numerous tax advantages to a charitable gift annuity. A portion of your contribution can be claimed as a tax deduction, thereby reducing your tax burden. Part of the income you receive from the annuity each year will be tax-free. Charitable gift annuities funded with assets that have appreciated over time can also substantially reduce the burden of future capital gains taxes.

A charitable remainder trust (CRT) is another tool that helps you convert assets that have appreciated substantially into a lifetime stream of income. It serves the dual purpose of reducing income taxes now and can be structured to reduce estate and capital gains taxes when you die.

A charitable remainder trust involves transferring appreciated assets into an irrevocable trust which removes the assets from your estate. You receive a charitable income tax deduction for the donation, and the Trustee of the CRT can then sell the assets at fair market value. The sale proceeds are then reinvested in a manner agreed upon beforehand, usually in publicly traded investments.  The investment  proceeds are used by the CRT to pay you an income stream for life.. After your death, the CRT’s remaining assets go to the charity or organization you have designated.

If a CRT is not the right option for your needs, you may benefit from a charitable gift structure known as a charitable lead trust (CLT). A charitable lead trust is an irrevocable trust established to provide income to a charitable organization for an established number of years. Once the pre-determined number of years have passed, the remainder of the assets passes to the donor’s beneficiaries.

Contact KJK’s Estate Planning attorneys to learn more about CRT and CLT options and whether they are charitable gift structures that will benefit your estate plan.

Direct charitable gifts can benefit the charity of your choice as a bequest in your will or revocable trust.  Your will or trust will list specific charities and the amount you wish to bequeath each one. You can also choose to leave your bequest for general use by the charity, or you can specify or restrict how you want the charitable bequest  to be used for by the charity.

You can also make direct charitable gifts during your lifetime. Making lifetime charitable donations as part of well thought out plan, can reduce the amount of income tax you pay and further lower your estate taxes by removing the money or assets from your estate.