CHARITABLE GIFTS THAT GIVE BACK

One of the best ways to save income tax is through charitable gifts.  Charitable gifts give you back rewards in satisfaction, recognition and tax benefits.  Some also give you back a stream of income. 

If you would like to make a significant charitable gift but are concerned that you may need the income from the gifted property, you may have decided to include it as a bequest in your Will or Revocable Trust.  But you do not get an income tax deduction for a bequest.

Did you know that you can make a gift that will give you a current deduction and income?  You can do this by establishing a charitable gift annuity or charitable remainder trust.

If you establish a charitable gift annuity, you gift property to a charity, and it agrees to pay you a fixed amount every year.  If you create a charitable remainder trust, you contribute property to an irrevocable trust and retain the right to receive an amount determined by a percentage of the value of the assets of the trust determined either at the inception of the trust, or on an annual basis.  You can retain the income stream for a period of years or your lifetime(s). There are many technical requirements for these gifts.

Unlike a gift in your Will or Revocable Trust, a charitable remainder trust or charitable gift annuity gives you a current income tax deduction for a portion of the gift.  And because you have retained an income stream, you have not lost the use of the gifted property.  If you gift an appreciated asset, you can defer or eliminate payment of the capital gains taxes.  In a charitable remainder trust you can be the trustee, and even reserve the right to name different charities to receive the gift after your income stream ends.

If you would like more information, contact:  Christopher Anderson (816.472.3117), John Dooling (314.259.4743), Jonathan Igoe (314.342.8019) or one of the other attorneys in the Tax, Employee Benefits and Trusts and Estates Practice Group.

Please feel free to pass this on to any colleague or client who may be interested in this information.

Internal Revenue regulations state that only a formal opinion that meets specific requirements can be used to avoid tax penalties.  Any tax advice in this communication is not intended or written to be used, and cannot be used by a taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer, because it does not meet the requirements of a formal opinion.  If you want to make arrangements to receive a formal opinion, please contact the sender of this message.