Charitable Giving Strategy: Planned Giving - Trust Point

Charitable Giving Strategy: Planned Giving

Two people handing each other a gift box

An option known as planned giving can allow you to help a favorite cause without compromising your financial security.

Ours is a nation of givers and helpers. From volunteering in the community to donating to various charities, large numbers of us are actively engaged in assisting those who need help.

If you want to support a favorite charity, you may be interested to know that there are other ways to help than by making an outright gift. An option known as planned giving can allow you to help a favorite cause without compromising your financial security.

What Are Planned Gifts?

Planned gifts can include a wide variety of gift assets from cash and marketable securities to a family home or other real estate to closely held business assets. A program of planned giving is simply one in which you think strategically about giving so that you can maximize the financial, tax, and personal benefits of your gift giving.

Any gift you make to a charity can result in a significant income tax deduction for the year in which you make the donation. In addition, charitable gifts can potentially reduce estate and gift taxes. To qualify for the deduction, certain requirements must be met. For example, the charity must be a qualified charity for tax purposes. Go to and review Tax Exempt Organization Search, an online tool, to verify that the charity you are interested in helping is indeed a qualified public charity.

Planned Giving Options

Here is a brief overview of several planned giving options:

  • Immediate gift. This is an outright gift you make to a charity during your life or at your death through your will or other estate planning document.
  • Charitable trust. With a charitable trust, you can split a gift between a charitable and noncharitable beneficiary. This approach allows you to assist your favorite charity without impacting your future financial security. There are two main types of charitable trusts:
    • o A charitable remainder trust gives you or another noncharitable beneficiary the opportunity to receive an income from the assets you donate.
    • o With a charitable lead trust, you name a charity as the income beneficiary of your trust. The charity receives annual distributions during the term of the trust. At the end of the trust term, the remaining trust property returns to you or passes to someone you have designated.
  • Private foundation. Donors interested in large, ongoing giving programs often form private foundations to support cultural, educational, scientific, or other charitable projects. As the donor, you determine how the foundation’s funds will be used and how long the foundation will exist. However, foundations must comply with a number of legal requirements governing their operation.
  • Donor-advised fund (DAF). DAFs are offered by local community foundations, like the La Crosse Community Foundation and other providers. With a donor-advised fund, you contribute a lump-sum to the fund to the equivalent amount of money that you would have normally donated over a number of years. You then instruct the fund manager to donate to specific charitable organizations or causes, which they will do over time. Your selected charities continue to receive monies each year. Rather than you making a direct contribution, the DAF makes the annual distribution on your behalf. Your contributions to a DAF can generate an income tax deduction and can also remove assets from your taxable estate.

There are other types of planned gifts, such as gifts of life insurance and life estates. Be aware that all planned giving strategies are complex and you should seek the advice of a financial professional before you commit to making a planned gift. See how we can help you get started on establishing your charitable legacy.

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