Charitable Giving / Legacy Planning | Pierro Connor & Associates, LLC

Charitable Giving/Legacy Planning

Do you make gifts to charities, or do volunteer work at charitable organizations? Would you like to benefit these organizations with a gift when you die? With proper planning, you may be able to gift to your favorite charity and receive a favorable income or estate tax deduction for the gift. You can make a direct gift of funds to your favorite charity, or create a charitable trust such as a charitable remainder trust or charitable lead trust. You can also create a private family foundation in your family’s name that is a charitable organization that will last for many years to come and continue your pattern of gifting to charity.

A charitable remainder trust is a trust established by you that provides an income stream to you and/or your spouse, and provides that at the end of the trust term the balance of the trust funds go to a charity of your choosing. You will receive an income tax charitable deduction when you create the trust, for the portion of the trust that will eventually go to a charity. This plan is often combined with the purchase of a life insurance policy for your children, so they receive funds on your death to replace the funds that are going to charity.

A charitable lead trust is similar to a charitable remainder trust, except that the order is reversed. The charity receives the income stream for the term of the trust, and when the trust terms ends, the funds in the trust are distributed to your children or grandchildren. There are significant tax reasons for forming either a charitable remainder trust or a charitable lead trust, and we would be happy to discuss these options with you further at a consultation.

A private foundation is an organization formed by you for charitable purposes, for example to support cancer research or to support the arts. You will serve on the board of directors of the organization, as will your children. Each year the foundation must make distributions of at least 5% of its assets to other charitable organizations. Any contributions you make to the foundation qualify for an income tax charitable deduction. The private foundation is an excellent tool for you to create a legacy and teach your children and grandchildren the importance of charitable giving.