Give 'Til It Hurts?
March 17th, 2014
Charitable gifts can help many people. Of course, they help the beneficiaries of charities. Well-planned gifts also can help the donor by reducing income taxes and by providing a stream of income from an asset that previously generated no income.
Helping a charity can make you feel good. However, helping a charity and getting a little something in return can make you feel great. But how do you go about doing that?
A recent article in Investing Daily, titled “Using Charitable Gifts to Increase Your Income,” provides some excellent answers to this question.
By creating a CRT or charitable remainder trust, you donate appreciated capital gain property to an irrevocable trust you create. The trust then sells the property free of any capital gains taxation and invests the proceeds to generate an income stream on principal not diminished by capital gains taxes.
The trust pays you (or your beneficiaries) income for some period of years (up to 20 years) or for life, whichever you decide. After this period is over, the remainder of the property in the trust passes to the charities you designated when you created the trust or changed thereafter.
To sweeten the arrangement even more, when you transfer property to the trust, you receive a charitable contribution deduction.
This is not a do-it-yourself project, so consult with an experienced estate planning attorney to determine whether this technique is right for your unique circumstances.
Reference: Investing Daily, February 13, 2014: “Using Charitable Gifts to Increase Your Income”