Giving Changes Lives, Make a Lasting Impact

One of our greatest pleasures comes from helping clients plan a legacy that will outlast them and their heirs while helping them give to the causes that matter most to them while also saving on taxes and protecting their wealth. HoyleCohen advisors have helped clients give millions of dollars to causes that are near and dear to them. As with any planning strategy, giving strategies need to be regularly reviewed, updated and kept fresh and alive.

As part of our Loose-Ends series we consider several areas that should be regularly re-assessed and aligned with updated goals, documents etc. There are a myriad of ways a person or family can set up a formal philanthropic strategy. Here we discuss the loose ends to be managed and secured with respect to Donor Advised Fund’s (DAF’s) and Charitable Remainder Trusts (CRT’s).

Reviewing your DAF

A Donor Advised Fund (DAF) is a low-cost vehicle for charitable giving which can provide income tax benefits and involve the use of a sponsoring organization (public charity) to provide research for any 501(c)3 organizations in which you’re interested.

The fund provides investment management at a low cost, administration and accounting services, a structure for your wishes to be administered well into future generations, and grant-making support. Establishing a DAF is relatively easy, inexpensive, and can be done through numerous institutions. A DAF is a great way to create a legacy of family philanthropy.

Potential loose-ends to secure and manage

• Monitoring asset mix and performance regularly
• Making charitable distributions as desired
• Verifying that charitable objectives are current and being met
• Reviewing and monitoring the mission statement and giving guidelines
• Discussing the legacy aspirations with potential future donors
• Forming a Donor Advisory Board to determine which charitable organizations will receive distributions
• Coordinating with the Community foundation to determining the process for future distributions as directed by the Family Donor Advisory Board
• Conducting periodic family briefings for transparency and open communication

Reviewing Your Charitable Remainder Trust (CRT)

A Charitable Remainder Trust (CRT) allows you to receive a partial present income tax deduction, eliminates capital gains tax on the sale of gifted assets, provides an income stream during your life, benefits the community through charity, leaves a legacy, reduces your estate taxes, and diversifies your highly appreciated stock portfolio or real-estate with a low-cost basis. To establish a CRT, you’ll have to select the trust type, payout rate, payout period, 7520 rate, trust term, trustees, charitable beneficiaries (these can be changed), and a trust administrator. You are then expected to draft and execute the trust, establish accounts in the name of the trust, appraise the assets to be transferred into the trust, and transfer the asset accordingly.

For a simplified example of how a CRT works, check out a recent post by Senior Wealth Advisor, Ty Summerlin by clicking here.

There are several areas to ensure are up to date and in compliance when using a CRT such as:

• Conducting the annual January valuation
• Issuing the distributions per the trust document
• Preparing and filing appropriate tax forms (Federal and State)
• Monitoring and manage the investments
• Monitoring income beneficiaries
• Monitoring and reviewing the charitable beneficiaries

If you are interested learning more about our Loose Ends – Wealth & Beyond programs check out our recent blogs, download the outline by clicking here, or reach out to your advisor today!