Charitable Tax Planning
A charitable tax plan can be set up as part of your revocable living trust planning, coming into existence at the time of your death, or as a stand-alone plan during your lifetime. Some of the techniques used in our tax and charitable planning process include Charitable Lead Trusts, Charitable Remainder Trusts, and Private Foundations. The Charitable Lead Trust is a type of charitable trust that can reduce or virtually eliminate all estate tax on wealth passing to heirs. In order to accomplish this goal, you create a trust that grants to a charity or charities, for a set number of years, the first or ‘lead’ right to receive a payment from the trust. At the end of the term of years, your children or grandchildren receive the balance of the trust property’ which often is greater than the amount contributed, free of estate tax in most instances. The remainder interest ultimately passing to the heirs, however, will be affected by the performance of the trust’s investments. The Charitable Remainder Trust is a type of trust specifically authorized by the Internal Revenue Code. These irrevocable trusts permit you to transfer ownership of assets to the trust in exchange for an income stream to the person or persons of your choice. A private foundation may provide a tremendous opportunity for donors to educate family members as to the donors’ philanthropic goals, and may also provide younger family members with a sense of responsibility and stewardship of family wealth. The private foundation may be structured to limit the scope of its charitable activities, by defining the permissible donees for charitable distributions, or may be structured to allow for unlimited charitable activities.
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