Planned Giving

Planned Giving is a process to take advantage of various strategies authorized by the internal revenue code that will provide certain income and gift tax benefits to you, the donor, while benefiting the Parish. The Planned Giving process does require planning. This section of our web site is designed to give you certain basic information about several of these strategies so that you may discuss them with your professional advisors or approach us for additional information about them.

Planned Giving involves more planning and strategy than the type of outright giving you have done by your contributions to our weekly collections or checks you write to other charities. Planned Giving involves an arrangement between you and the Parish where you get a tax benefit and an income stream for the gift you have made. It involves the transfer of cash, equities or other property either directly to the Parish or to a variety of trust arrangements. Planned Giving can be inter vivo (while you are living) or testamentary (done after your death).

Planned Giving can be a way for you to assure who will benefit from the assets you have accumulated. There are three possible recipients of your assets: 1) your heirs; 2) a charitable organization; 3) the government. In the absence of Planned Giving program, the government may get a larger portion than you intended at the expense of your heirs and the charities.

There are many strategies and trust types. Our intention is not to cover all possibilities, but to introduce the most often used strategies. Everyone’s situation is unique. The strategies and trust types have to be analyzed according to your particular financial situation, giving objective and tax structures in effect at the time you implement a Planned Giving program.

Subsequent pages in this section will address the following:

1. Charitable Remainder Trusts.
2. Charitable Lead Trusts
3. Charitable Gift Annuity
4. Retained Life Estate
5. Leveraging gifts with life insurance.

Assets that you consider for a Planned Giving program include, but are not limited to:

1. Cash
2. Securities ( especially appreciated ones)
3. Real estate
4. Business interests
5. Retirement plan assets

Two final comments before we look at the five gifting strategies. First, the most commonly used Planned Giving option is to name a charity in your final will to receive some of your property. Second, if you are age 70.5 or older you can transfer assets up to $100,000 directly from your IRA to an eligible charity without having to declare the transferred assets as income. Once over age 70.5 you are subject to the required minimum distribution rules and have to take distributions from your IRA whether you need the money or not. So, you may want to consider doing the transfer directly to a charity or to the Parish. This option expires at the end of 2011 unless Congress extends it further.


“Charity begins at home” is an old adage we’ve heard over the years. In 1969 charity became a part of the internal revenue code when it granted an itemized deduction for contributions to charities. So, now charity can be as beneficial to the donor as to the donee. One of the most popular trust giving strategies is the Charitable Remainder Trust (CRT).

A CRT allows you to donate an appreciated asset such as stock, real estate, or business to a CRT and accomplish the following:

1. Take a charitable deduction for a portion of the market value of the donated asset. The amount depends in part on your age and the age of your spouse.

2. Sell the appreciated asset in the CRT and pay no capital gains tax.

3. Receive an income from the CRT for the remainder of your life and the life of your spouse.

What must the trust do with the assets at the second death of you and your spouse? This is where charity comes in. The ultimate beneficiary (remainder man) of the CRT must be a charity as defined in section 170© of the internal revenue code. So, what is your favorite charity? There are many worthwhile charities you can name. These include your church, alma mater or even a private family foundation.

What about your heirs? You just gave away an asset they may have inherited. You can replace the value of the asset to your heirs with life insurance purchased through an irrevocable life insurance trust (ILIT). If properly structured, the ILIT will pass the insurance proceeds to your heirs, in cash, and free from income and inheritance taxes. This may be much better for them than inheriting the appreciated asset, paying inheritance tax and having to sell the asset to generate cash.

CRT’s may also help in other financial, retirement or estate planning strategies. We mentioned the avoidance of capital gains tax when appreciated assets are sold after being contributed to a CRT. This is certainly a primary benefit of a CRT. A few others are:

1. A CRT produces another source of retirement income to supplement social security, pensions or required minimum distributions from your IRA, 401(k) or other defined contribution plans.

2. The charitable deduction, if not completely used in the year of the contribution, can be carried forward for 5 years or until completely used up thereby reducing income taxes in those years.

3. The charitable gift will be viewed differently for Medicaid five year look back purposes. The value of the gift for Medicaid purposes will be discounted for the value of your remainder interest in the trust, which is your right to a life time income.

4. You will have reduced the value of your estate and, thereby, reduced the amount of your estate taxes.

5. You will have directed assets away from the federal or state governments to your designated favorite charity.

6. Most importantly, it will make you feel good.

This may be a topic that you want to explore further. If so, please contact us and we will discuss the concept of a CHARITABLE REMAINDER TRUST with you in detail. Remember, when you are gone the entity that has first rights to your assets is the government in the form of taxes unless you have done some planning and taken some steps to preserve your assets for your heirs or your favorite charity.