Charitable Estate Planning

Cary, NC | Apex, NC | Raleigh, NC | Wake Forest, NC | Holly Springs, NC

Have you considered estate planning for charitable ventures? Charitable estate planning combines philanthropic, financial, estate and tax planning. It is a process that can help you make gifts to causes dear to you, often with dramatic tax and financial rewards. All of us have a cause that is close to our hearts. Whether it is finding the cure for a disease, building a school, hospital, or library, seeking ways to slow global warming, bringing theater to town, or providing shelter for the homeless, there are charities in your community making a difference. If you're looking to have a professional walk you through this process, our estate planning attorneys can provide guidance and assistance. 

Charitable Lead Trusts

A Charitable Lead Trust is a trust that makes annual payments to a charity for a certain number of years, after which the trust assets will pass to non-charitable beneficiaries designated by the donor (typically children or grandchildren). The annual payments to charity can be either a fixed annuity amount or a fixed percentage of the fair market value of the trust each year. A Charitable Lead Trust that pays a fixed annuity amount is called a Charitable Lead Annuity Trust (CLAT); a charitable trust that pays a percentage each year is called a Charitable Lead Uni-trust (CLUT).

At the time a charitable lead trust is created, the donor is deemed to have made a gift to charity and a gift to the non-charitable beneficiaries. The gift to charity qualifies for the gift tax charitable deduction. The gift to the non-charitable beneficiaries is considered a taxable gift, for which the donor must either apply the donor’s unused estate and gift tax exemption (currently $1,000,000) or pay gift tax. Our estate planning attorneys discuss the details of each of our trusts you may decide topen.

The amount of the gift tax charitable deduction depends on the length of time payments will be made to charity. It also depends on the size of the payment to charity, and the rate prescribed by the IRS to calculate the present value of the charitable payments (the “section 7520 rate”). In addition, the asset is removed from the estate, reducing subsequent estate taxes. We offer our services to Apex, NC; Cary, NC; Raleigh, NC; Wake Forest, NC; Holly Springs, NC and nearby areas.

While the contribution is irrevocable, the grantor may have some control over the way the assets are invested, and may even switch from one charity to another (as long as it's still a qualified charitable organization). Under the guide of our estate planning attorneys, we can work with you to figure out your fixed annuity amount or fixed percentage. 

Charitable Remainder Trusts

Our other trust available is the A Charitable Remainder Trust. It is an arrangement in which property or money is donated to a charity, but the donor (called the grantor) continues to use the property and/or receive income from it while living.  A Charitable Remainder Trust that pays a fixed annuity amount is called a Charitable Remainder Annuity Trust (CRAT); a charitable trust that pays a percentage each year is called a Charitable Remainder Uni-trust (CRUT).

In the Charitable Remainder Trust, beneficiaries receive the income and the charity receives the principal after a specified period of time.  Through this transaction, the grantor avoids any capital gains tax on the donated assets, and also gets an income tax deduction for the fair market value of the remainder interest that the trust earned. Our estate planning attorneys are here to make this process as smooth and easy as possible. 

The amount of the gift tax charitable deduction depends on the length of time payments will be made to the grantor, the size of the payment to grantor, and the rate prescribed by the IRS to calculate the present value of the charitable payments (the “section 7520 rate”). In addition, the asset is removed from the estate, reducing subsequent estate taxes.

While the contribution is irrevocable, the grantor may have some control over the way the assets are invested, and may even switch from one charity to another (as long as it's still a qualified charitable organization). Contact one of our estate planning attorneys to help get your charitable remainder trust started today. Our estate administration serves Cary, NC; Apex, NC; Wake Forest, NC; Holly Springs, NC and nearby areas.

Contact Us for Charitable Planning

Chambers & Ennis would be happy to help you plan to set aside money for charitable donations. We want to help support you and your philanthropy. Talk to an estate planning attorney who can help you set aside money for personal causes, including the establishment of public charities. We will help you understand the best strategies for charitable giving with tax advantages for you. If you have questions about charitable planning, don't hesitate to contact us. We offer advice on estate administration, as well as special needs trusts, will preparation, and probate in Cary, NC; Apex, NC; Wake Forest, NC; Holly Springs, NC; and throughout the Raleigh, NC area. Call us today.