Maximizing Your Financial Impact through Charitable Giving
Charitable giving is a meaningful way to give back to the community and support causes close to the heart. While writing a check or making a cash donation is the simplest and most common giving method, there are strategies like Charitable Lead Trusts (CLTs) and Charitable Remainder Trusts (CRTs) that stand out for their ability to benefit both donors and charitable organizations.
Charitable Lead Trusts
Charitable Lead Trusts (CLTs) involve a donor making an irrevocable gift of assets to the trust. These donations are invested, providing yearly payouts to the charity of choice. The trust's payments to charity continue for a set amount of time. After that period ends, the balance is paid to a noncharitable beneficiary, like the donor or family members. CLTs offer a seamless way for donors to make a one-time gift, which results in an ongoing income stream for the charitable beneficiary.
Additionally, gifts to a CLT remove assets from the donor's taxable estate, potentially reducing transfer taxes, such as gift and estate taxes. They may also provide the donor with one large tax deduction at the trust's initial funding.
Charitable Remainder Trust
Charitable Remainder Trusts (CRTs) work in a similar way. Donors contribute assets to an irrevocable trust, which initially makes payments to noncharitable beneficiaries, including family members or even the donor, for a set period. After this time, any remaining assets are then distributed to the designated charity.
By setting up a CRT, donors become eligible for a partial tax deduction based on the value of the charity’s share of the trust. CRTs also offer the benefit of removing assets from the donor’s taxable estate.
While these strategies offer powerful ways to make a difference through giving, there's always more than one path to generosity. If you're curious about other ways to support causes that resonate with you, your advisor or financial planner can help.
You can also follow DCM on LinkedIn for more inspiring insights and ideas. Together, we can make a world of difference.
This report was prepared by Donaldson Capital Management, LLC, a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Information in these materials are from sources Donaldson Capital Management, LLC deems reliable, however we do not attest to their accuracy.
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