Individuals, Couples and Families

AGELESS CHARITY IN UNCERTAIN TIMES: There’s good news in these uncertain times. Integrating charitable giving into your financial strategies may provide you both tax savings and increased income while creating a legacy for our community. It can pay to give. Of course, you know that a gift to a charitable organization can help reduce your taxes. But charitable planning goes beyond writing a check to feed the homeless at Christmas or to help children in Iraq. Whether you’re an up-and-coming thirty-something or a grandparent well into your “golden years,” including charitable strategies with careful financial planning will help you accomplish personal and family goals. Here is a brief look at charitable planning options you can use today and in the years to come. Every Adult at Any Age

Create or update your will. Leave instructions about how you wish to distribute your possessions and assets.

Designate your favorite charitable organization as a contingent beneficiary or remainder beneficiary of your estate and/or your retirement plan assets. (The charitable organization will get what is left over after your distribution plans have been carried out.)

Did you know?
IRA-type assets are your most cost-effective estate gift.

Thirty-something and Single - Unless you have significant wealth that requires more complex planning, consider designating a charitable organization as the beneficiary of your IRA. If you wish to leave this asset to a family member or friend, include a charitable organization as the contingent beneficiary. If your heirs do not need or want the funds, the resulting charitable gift is easy (and 100 cents of every dollar goes to the charity). When planning cash gifts, consider combining a number of your smaller gifts into several larger ones, to increase their impact on the issues you feel are most important. Whenever possible, donate appreciated securities rather than cash.

Did you know?
Combining gifts into one tax year will maximize your charitable deductions. For example, instead of making gifts in November, December and March, group them into a single tax year.

Raising a Family - Although you may not have much flexibility in your charitable giving during these years, your involvement in the community can positively influence the values of your children. Here are some ways to encourage them to participate wisely. Provide your children with a “charitable allowance.” They will learn to evaluate their reasons for giving and about the charities that will receive their gifts.

Encourage your parents to think charitably. Many of them are conserving their estates for their heirs (you and your children). Depending upon your financial situation, you may not need or want all of your parents’ estate. Give them your permission to make the charitable gifts, which they think are important.

Develop a multi-generation charitable team. Involve children, grandparents and yourselves in setting charitable priorities. It’s a great way to deepen family values and to create a legacy.

Get involved with charitable groups that are working on the issues that interest you. It’s the best way to learn how your charitable dollars are put to work – and to see the results.

Booming at Fifty - By now you are saving for retirement. You are finding ways to preserve the wealth you’ve accumulated and are looking at estate issues. Perhaps you have significant assets accumulating in an IRA or other tax-deferred plans. Regardless of what happens to the estate tax, these assets will continue to be taxed at ordinary income rates. So if charities are included in your estate plans, IRA assets are the tax-wise choice.

Consider a charitable option to save more for retirement or provide for your children’s education. Using a charitable remainder trust, you can put away money today to use in retirement, and get a tax deduction to use this year (with larger gifts, for five more years). At an arranged point in the future, you will receive income. Between the time you create the trust and the first pay-out, the trust builds tax-free, like an IRA. With a slight variation, a charitable trust can function as an education trust for children. You still receive current tax deductions, income, and upon termination of the trust, your charity receives a significant gift.

Achieving Golden Years Goals: The most important step you can take at this time is to determine what it will cost to live in retirement, and how much is sufficient to leave to your heirs. Once you are satisfied that you and they will have an appropriate amount, you are ready to consider charitable investments that will sustain our community.

Insure the future. When you had children at home, insurance was an important part of your plan. Today you may no longer need that policy. It can make an excellent gift to help build the endowment of one of your favorite charitable organizations.

Alternatively, use tax savings from charitable giving to purchase life insurance. In this way, inheritance will not be diminished because of your generosity to charity. What will your favorite charities do without you? Answer that question by endowing your annual gift to them. For example, to ensure that an organization continues to receive your annual gift of $500 after you are no longer here, include a bequest of  $10,000 in your estate plan designated for the charity’s endowment. It will generate the $500 level of support for years to come.

Reduce the headaches of property management. Use your recreational property or rental property to fund a charitable trust. You bypass capital gains taxes because the assets are sold within the trust. The assets can then be diversified to provide you with income for life.

Charitable trusts may be the answer to troubling dilemmas.

• By establishing a charitable trust, the spouse who has managed the family money can be assured that the surviving spouse will have a secure income for life.
  
  
• Grandparents can provide for their grandchildren’s education.
  
  
• When appreciated assets are used to create charitable trusts, they are no longer part of your estate and cannot be included in estate taxes.

Give and live. Your residence can be given away, even as you continue to live there. If you’ve paid off your home, you can give it to a charitable organization but continue to live there for the rest of your life. This gift immediately translates into tax savings. You can use these deductions the year of the gift and up to an additional five years.

DISCLAIMER:  Individual circumstances vary considerably. Examples used are intended as educational and not professional legal or tax advice. Please consult a competent advisor about your specific situation. © 2003 Retriever Development Counsel, LLC

Individual Clients Examples*

Example One:  When the consultation began, the donor thought he would made a few gifts of $10,000 each but was elated to discover that he could do more and solve a number of personal objectives. Planned a special needs trust to provide for a disabled son; a charitable remainder trust to provide for money management for his wife should he pass first, made charity the beneficiary of his over-funded pension plan. Total face value of gifts: $900,000.

Example Two: Assisted a donor as she thought through the options (and opportunities) of giving one of her homes ($1 million value) outright, or as a retained life estate, a charitable trust, or as part gift (bargain sale) or a gift annuity.

Example Three: Assisted a successful businessman with selecting charities in which to become involved and to contribute time and money.

Example Four: Assisted a donor making strategic decisions about the charitable allocation of $6 million of his estate and to identity and qualify nonprofit's matching his interests and values.

*Names of individual clients are not listed to ensure privacy.