Philadelphia Area Charitable Planning Services
Serving King of Prussia, Springfield and Bala Cynwyd Areas
At The Robinson Law Firm, we encourage and assist the tradition of giving to charitable causes. When done in conjunction with estate planning, charitable giving strategies may also save capital gains taxes, increase income, and provide you, or whomever you designate, with an income for life. Additionally, these types of gifts may provide an estate tax deduction — an important consideration in planning your estate. This page describes a few of the strategies that may be used to maximize your charitable giving.
Charitable Lead Trust
The Charitable Lead Trust is a type of charitable trust that can reduce or virtually eliminate all estate tax on wealth passing to heirs. In order to accomplish this goal, you create a trust that grants to a charity or charities, for a set number of years, the first or ‘lead’ right to receive a payment from the trust. At the end of the term of years, your children or grandchildren receive the balance of the trust property–which often is greater than the amount contributed–free of estate tax in most instances.
Charitable Lead Annuity Trusts are particularly suited for hard-to-value assets (such as real estate or family limited liability company interests) and assets which are expected to grow rapidly in value.
Private Family Foundation
A private foundation is a non-governmental, nonprofit organization having a principal fund of its own, managed by its own trustees or directors, and established to maintain or aid social, educational, charitable, religious or other activities serving the common welfare. A private foundation may serve as a private, family controlled receptacle for charitable contributions by family members, trusts established for their benefit (including charitable remainder trusts and charitable lead trusts) or family business entities.
There are significant income, estate and gift tax benefits which flow from the establishment and funding of a private foundation, and the use of a private foundation has substantial estate and gift tax benefits to donors. Contributions to private foundations (both operating and non-operating foundations) are deductible for federal gift and estate tax purposes. The private foundation may be funded during the donor’s lifetime or may receive the bulk of its funding from distributions from the donor’s revocable living trust at the donor’s death. In addition, the private foundation may serve as the charitable receptacle for distributions from charitable remainder trusts and/or charitable lead trusts established by the donor.
Significantly, the private foundation may provide a tremendous opportunity for donors to educate family members as to the donors’ philanthropic goals, and may also provide younger family members with a sense of responsibility and stewardship of family wealth.
Charitable Remainder Trust
The Charitable Remainder Trust (‘CRT’) is an irrevocable trust that permits you to transfer ownership of assets to the trust in exchange for an income stream to the person or persons of your choice (typically you, your spouse or you and your spouse) for life or for a specified term of up to 20 years. With the most common type of Charitable Remainder Trust, at the end of the term, the balance of the trust property (the ‘remainder interest’) is transferred to a specified charity or charities. Charitable Remainder Trusts reduce estate taxes because you are transferring ownership to the trust of assets that otherwise would be counted for estate tax purposes.
A Charitable Remainder Trust can be set up as part of your revocable living trust planning, coming into existence at the time of your death, or as a stand-alone trust during your lifetime. At the time of creation of the CRT you or your estate will be entitled to a charitable deduction in the amount of the current value of the gift that will eventually go to charity. If the income recipient is someone other than you or your spouse there will be gift tax consequences to the transfer to the CRT. At the end of the term of a Charitable Remainder Trust, the remainder interest passes to qualified charities as defined under the Internal Revenue Code.
Philadelphia area Estate Planning and Elder Law attorney Dahlia Robinson-Ocken offers creative planning in the areas of estate planning, elder law planning, wills, revocable living trusts, long-term care asset protection planning, powers of attorney, medical powers of attorney, guardianships, irrevocable trusts, living wills, estate, probate and trust administration, probate avoidance, asset protection and planning for physicians, tax planning, lawsuit protection planning (including professional malpractice lawsuit protection planning), planning for minor children, faith-based planning, Medicaid planning, Veterans benefits planning and resources, charitable planning and gifting, special needs and disability planning, estate tax planning, business law and succession planning, and Medicaid applications and long-term care crisis planning. Dahlia serves the entire southeastern Pennsylvania and southern and central New Jersey region, including Philadelphia, Montgomery County, Delaware County, Bucks County, Chester County, King of Prussia, Springfield, and Conshohocken in Pennsylvania, as well as Camden County, Gloucester County, Burlington County, and Mercer County in New Jersey.