Charitable Giving Strategies

Trusts ● Family Foundations ● Gift Annuities ● Gifting Strategies

Once an individual or family has accumulated a degree of wealth, it’s not uncommon to begin thinking of how this wealth can be shared with children, with other family members, and even with the community at large.

Planned giving is often part of a comprehensive estate planning process, but charitable giving and gifting strategies can also be addressed as part of an annual tax planning process.

For sound legal guidance on strategies to leverage your charitable giving and personal gifting to reach your financial and estate planning goals, contact the Gierach Law Firm in Naperville, Illinois. With more than 30 years of estate planning experience, attorney Denice Gierach can explain the many trust and gift options available to you.

Planned Giving for Charitable Purposes

Through strategic charitable giving, many donors are able to:

  • Memorialize the family name
  • Support causes important to family members
  • Give to a charity both during life and after death
  • Give a larger gift than might otherwise have been possible
  • Receive a stream of income in consideration for the donation
  • Reduce capital gains or estate taxes

One or more of the following charitable giving options may be appropriate for you.

Gift Annuities: You contribute funds or assets to a nonprofit organization and in return you receive a fixed annuity payment from the general assets of the nonprofit for the rest of your life. You can avoid immediate capital gains tax by using this vehicle.

  • Benefits: A partial income tax deduction and a portion of each annuity payment is a tax-free return on your investment. You can avoid immediate capital gains tax by using this vehicle

Charitable Remainder Trusts: The most common charitable remainder trusts are annuity trusts and unitrusts. With a charitable remainder trust you establish a trust and receive income from that trust for a certain number of years, after which time the balance in the trust is transferred to the charity of your choice.

  • Benefits: You or your beneficiaries receive income from a trust for a period of years and you can take a charitable deduction for a portion of the gift in the year the trust is formed and you can avoid the immediate capital gains tax on appreciated property that you would be selling to diversify your portfolio.

Charitable Lead Trusts: In some ways the opposite of a charitable remainder trust, the charitable lead trust distributes income to the charity for a set number of years, after which the remainder of the trust passes to your heirs.

  • Benefits:Your beneficiaries will receive income from the trust and you can take a charitable deduction for a number of years. If a charity is a beneficiary of this plan, they do not pay income tax on the proceeds they receive, making maximum use of your gift to charity.

Charitable Bequests: When you leave a gift to charity (cash or other assets) through a will or living trust, it is called a charitable bequest.

  • Benefits: Even persons of modest means can provide valuable financial support to a favorite charity through a bequest in a will for a specific dollar amount or a percentage of an estate.

Beneficiary Designation: Naming a charity as the beneficiary of your life insurance, pension plan or 401K is another way that families with limited assets can make a significant charitable gift.

  • Benefits: This method is available for families of modest means and may have some tax advantages. You can change your beneficiary designation relatively easily at any time during your lifetime.

You may also wish to consider:

  • A family foundation or community foundation with donor-advised funds
  • Direct charitable contributions of land or property

Contact an Illinois Estate Planning Attorney

To learn more about how you and your family can leave a lasting legacy in our community, contact the Gierach Law Firmfor skilled legal help.