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Farm & Family: Consider these questions if you want to make charitable gifts part of your estate.

Mark Balzarini

March 8, 2024

2 Min Read
A newspaper clipping with the words "charitable giving" against a background of $100 bills
YOU HAVE OPTIONS: Those wishing to add charitable giving to their estate plan have a variety of options available to them, from a simple gift to charitable remainder trusts to a private foundation. Zimmyytws/Getty Images

Charitable planning is a part of many estate and succession plans. There are a number of options for making charitable distributions in your plan, including simple gifts, charitable lead trusts, charitable remainder trusts, gift annuities, donor advised funds and private foundations.

When deciding how to make charitable gifts, consider the following questions:

  • How much are you donating?

  • Can you and your family afford to make the donation?

  • Do you expect to receive a portion of the gifted asset back?

  • Will the loss of these assets adversely affect your operation?

  • Do you want to make the donation while you are living or after your death?

  • Do you want to make the donation to a charity’s general fund or to a particular project?

  • Do you want your gift to create an income stream for the charity?

  • Do you know the charities you want to donate to?

  • Do you want flexibility for yourself and your family to make changes to charities receiving funds?

  • What tax advantages are you aiming for when making the donations? Saving on income taxes? Avoiding capital gains? Reducing potential estate tax liabilities?

A private foundation may be the answer to these questions for some. This option is suited for a person who wants to make a large donation. The foundation can be established now while the donor is living or after the donor’s death through the donor’s trust or will. Some prefer to establish this during their lifetime so they are able to set up the foundation’s management and see the benefit the foundation provides.

The donor can direct how the donated funds are managed and distributed. This is done through choosing the foundation’s trustee(s) or board of directors. Many times, the donor’s family members take an active role in overseeing the charitable distributions. They will have the opportunity to review and choose how the funds are used by a particular charity, or they can manage and fund the foundation’s own charitable projects.

Those donating to the private foundation can receive an income tax deduction at the time of the donation. Also, if stock or other appreciated assets are donated to the foundation and then sold by the foundation, the donor can avoid the capital gain tax on the sale transaction. By donating the assets to the foundation, these assets are no longer included in the donor’s estate for the purpose of calculating estate taxes and reducing estate tax liability.

About the Author(s)

Mark Balzarini

Mark Balzarini is an attorney at law with Hellmuth & Johnson PLLC. Contact him at [email protected].

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