Charitable Planning

Charitable giving in the context of estate and gift tax planning takes many forms, and as with most tax planning, ranges from simple, outright gifts and bequests to more complex trust arrangements. As one example, a charitable remainder unitrust (sometimes called a CRUT) can enable a person to convert a non-income producing asset with significant potential capital gains liability into a fund that produces an income stream for life without liability for the capital gains tax. After creating such a trust, the person gives the highly appreciated asset to the trust where it is then sold. The trust reinvests the proceeds and pays the creator of the trust a specified amount, usually for life.

Because one or more charities designated by the trust creator is the ultimate recipient of the property remaining in the trust at its specified termination date, this planning technique allows the sale of the initial property to escape capital gains taxes, and also gives the donor current income tax deductions as well as estate tax savings.

Individuals who want to support a particular charitable cause but have reservations about leaving the monies outright to the charity often look to the Community Foundation of Frederick County, or a Community Foundation in the Baltimore or Washington areas. Community Foundations offer flexible tools to help clients fulfill their philanthropic goals while ensuring their gift benefits the chosen causes for the greatest period of time, or perhaps in perpetuity.