Archive

National Marketing Action Team 2006 Content Calendar

January 2006

Charitable Lead Trusts

Interest rates are quickly rising from their historic lows of the past few years. Before they rise higher, clients may be interested in taking advantage of a Charitable Lead Trust. In these trusts (which are the reverse of a Charitable Remainder Trust), donors assign an asset to a charity for a specific period of time, after which it reverts to the owner or his or her family. The tax advantages are significant—especially when interest rates are low. For example, a million-dollar property might be discounted by as much as 80 percent for gift or estate tax purposes. At the same time, any growth in value of the asset is passed to the heirs with no consequence to gift or estate tax. CFs are ideal venues for CLTs, which allow clients to make a significant charitable gift while preserving family wealth for the next generation. Charities benefit from the steady income stream that lasts for the duration of the trust.

Engaging Clients Adult Children in Giving

While much has been written about ways to include young children in charitable activities, little has been said about the benefits of involving adult children. For advisors, getting adult children involved in giving is the perfect way to reach out to the next generation, strengthen the relationship, and foster continuity within the family. Adult children can be named as co-trustees for a donor advised fund at a CF and work closely with the parents to direct the disbursements during their lifetime. Later, the children can continue to honor the memory of their parents by choosing recipients that match the interests of the parents. The article will describe strategies advisors can use for including adult children of clients in philanthropic endeavors.

March 2006

The Case for Donating Retirement Assets

This story is about the tax benefits of donating retirement assets, such as an IRA or 401(k), to charity upon a person’s death. IRD (income in respect of a decedent) is heavily taxed—it is subject to income tax and estate tax at the federal and state levels and may even be subject to an additional transfer tax if the beneficiary skips a generation. All told, more than 75 percent of the income can be lost to taxes. When clients choose to donate their retirement assets to charity instead, the money remains intact. One option is to put it into a donor advised fund at a CF so that the family continues to honor the memory and wishes of the client by directing the nature of the donations to cherished local causes.

Tax Planning and Will Issues

Often, professional advisors only see their clients on a regular basis when they are preparing tax documents (accountants), writing wills (attorneys), or reviewing quarterly performance (financial advisors). How can attorneys and accountants work together to emphasize the importance of having a will and using its provisions wisely to benefit family and charity? Leave a Legacy is a national program with strong local chapters, now mounting a national effort to get people to leave portions to charity in a planned gift.