Allebest & Associates

(949) 454-1774 - Phone
(949) 454-2550 - Fax

Charitable Planning

We are experts at charitable planning. Our expertise covers everything from creative annual gifting to forming complex charitable trusts, pooled income funds and operating foundations. We provide foundations and public charities with comprehensive legal counsel on a wide array of issues, including compliance issues, contract matters, directing annual meetings, and formulating rules and policies.

WHY PEOPLE GIVE

WHY PEOPLE GIVE

Values Transfer. To pass moral values and responsibility on to successive generations and on to society.

Emotional Benefit. To give one’s life meaning and significance. To leave a legacy. To memorialize one’s own life or other’s lives.

Community Development. To help the community, country or world prosper. To create and manage changes in society.

Repayment. To fulfill a perceived obligation for care or education received. To fulfill responsibilities transmitted by religious beliefs.

Tax Benefits. To receive a tax deduction.

TYPES OF GIFTING

Current Gifts. Gifts of Cash, Stock, Real Estate or Tangible Personal Property.

Deferred Gifts. Designated now, but delivery is deferred: Trusts; Life Insurance; Retirement Plans; Charitable Trusts.

Split-Interest Gifts. Split between an up-front interest and a remainder interest: Charitable Remainder and Lead Trusts.

Charitable Entities. Create and fund tax exempt entities: Operating and Non-operating Foundations; Pass-through Foundations.

Typical Objectives

TYPICAL OBJECTIVES

Include generations in “circles of influence”
Large tax deduction
Estate tax avoidance
Creditor protection
Ongoing contribution to the community

CHARITABLE TRUSTS

BENEFITS OF CHARITABLE TRUSTS

  1. Asset transferred to the trust: TRANSFER IS NOT A TAXABLE EVENT.
  2. Asset is sold inside the trust: SALE IS NOT A TAXABLE EVENT.
  3. Donors can afford to DIVERSIFY THEIR PORTFOLIO.
  4. Donors get a SUBSTANTIAL CURRENT TAX DEDUCTION.
  5. Donors get INCREASED INCOME & CASH FLOW.
  6. By replacing the gift, HEIRS GET A MUCH LARGER INHERITANCE.
  7. The assets in the trust have FULL CREDITOR PROTECTION.
  8. Donors get RECOGNITION DURING THEIR LIFETIME.

CHARITABLE REMAINDER TRUST

Charitable Remainder Trust

ADVANTAGES

You can secure a lifetime income. Save on income and estate taxes. Enjoy satisfaction making the gift. Receive public recognition.

WHO IS IT FOR

Generally if you are 50 or older. Own highly appreciated assets. In high income bracket. If giving appeals to you.


SPLIT-INTEREST GIFTS

A. Charitable Gift Annuities

The Donor makes a gift, the Charity pays the Donor annuity payments for the Donor’s lifetime, with the remainder to the Charity.

B. Deferred Charitable Gift Annuities

Similar to a Charitable Gift Annuity, except that the income payments are deferred for 1 or more years after the gift is given to the Charity.

C. Charitable Remainder Trusts

The Donor gifts assets to a special Trust. The Trust pays the Donor a fixed or variable income for the Donor’s lifetime, with the remainder to Charity.

D. Charitable Lead Trusts

The Donor gifts assets to a special Trust. The Trust pays the Charity a fixed or variable income for a fixed period, with the remainder to Donor’s family.

E. Donor Advised Funds

The Donor makes a gift to an investment account earmarked for charitable giving, with directions for grants to charities.

F. Charitable Life Estate

The Donor gifts their house, farm or vacation home to charity, but retains the right to use the property until the Donor’s death.

G. Pooled Income Funds

A separate fund set up by the Charity, into which donations of several Donors are pooled, and Donors get income based upon their share.

PRIVATE FOUNDATIONS

NON-OPERATING FOUNDATIONS

- Most common type, particularly for families.
- Does not directly operate any charitable service or activity.
- Funds usually come from a single source: individual, family or corporation.
- Not dependent on public support and thus are not active fundraisers or grant seekers.
- The bulk of the budget is used to make grants to other charitable organizations, which in turn provide services to the public.

PASS-THROUGH FOUNDATIONS

- Subject to all private foundation rules and regulations.
- Often used to establish foundation policies during the donor’s lifetime so that it’s ready for a larger fund at the donor’s death.
- All contributions must flow thru no later than 2 ½ months after the end of the tax year.

OPERATING FOUNDATIONS

- Subject to the same restrictions & reporting as non-operating foundations.
- It must directly carry out its charitable programs instead of making grants to other organizations.
- Must expend at least 85% of its net investment income directly for the active conduct of its own activities.
- EXAMPLES: operate museums, libraries, nursing homes, orphanages research institutes, or historic parks.
- The # of donors is so small it doesn’t qualify as a public charity.

POOLED-COMMON FUND

- Subject to all private foundation rules and regulations.
- Rarely used.
- Getting more attention by community foundations as a service.
- Provides the donor with considerable control over the eventual disposition of the funds.
- Bars the donor from building up a permanent endowment.



Allebest & Associates can help you with any charitable planning issues. Call today for a free, no obligation consultation (949) 454-1774, or

Call today for a free, no obligation analysis of your situation:
(949) 454-1774 or