CHARITABLE GIVING LEGACY

Many people decide to leave a legacy by

contributing to their community through charitable

giving. For example, many folks tithe 10% of their

income to church or are annual members of theatre

companies like the Kennedy Center or Arena Stage.

Others commit funds to their former school or

support historically black colleges through the

United Negro College Fund. Still others choose to

leave a legacy by supporting economic

empowerment through the US Black Chamber’s

Economic Development Fund. But while these

aims to ‘give back’ are commendable, care should

be taken to ensure they are sustained. When the

person who has made consistent contributions to

causes they hold dear, suddenly passes away or

becomes ill, these contributions are jeopardized.

To avoid this, I recommend that charitable givers

pass on their visions as part of their estate plan. In

this way, our charities will not lose significant

sources of revenue and the mission that has been

important to the donor can continue.

There are numerous options for setting up a

charitable contribution in your estate plan. The

easiest is a simple bequest through your will that is

a direct distribution upon passing through the

probate process. I have outlined three options

below. lifetime income stream for you, and

significant tax benefits to you and your heirs.

Ultimately, it may be even more beneficial for you

than a simple bequest.

Charitable Remainder Trusts (CRTs) are

irrevocable, tax-exempt trusts in which you place

assets to provide income for yourself during a specific

period after which, the remaining assets will be turned

over to your chosen charity. The trust can be funded

with assets such as bonds, mutual funds, stocks, and

real estate. It offers flexibility, a lifetime income

stream for you, and significant tax benefits to you and

your heirs. Ultimately, it may be even more beneficial

for you than a simple bequest.

For instance, if you have an appreciated asset

like real estate, and you sell the property yourself, you

will likely pay high capital gains taxes. But if you

transfer the property to a charity through a CRT, the

trustee may be able to sell the property with no gift,

estate, or capital gains taxes for the donor. The trustee

can then set up an investment that will provide an

income stream for you, which will be subject to

ordinary (i.e. lower) income taxes and capital gains.

At the death of the last beneficiary or the end of the

trust period, the remaining amount is distributed to the

named charity.

A Charitable Lead Trust is different from a CRT

because it allows you to place in trust assets that will

be left to your heirs; however, you specify a set

number of years during which a guaranteed amount in

the trust will be paid to a charity. You pay a

discounted gift tax when transferring assets to the

trust and the trust's beneficiaries are free of estate

taxes.

Setting up a Foundation is a way to provide

systematic gifts of special importance to you, the

founder. Foundations can fund college scholarships,

research grants, and the maintenance of collections or

real estate, among others.

We must be strategic and thoughtful in developing

our estate plans; it should include our values and

strengthen our legacy, ideally while saving tax

payments. Know your options when planning. But

nothing will happen to forward your goals and your

legacy if you do not plan.