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Charitable Estate Planning

Your estate plan can include the satisfaction of your charitable objectives either through lifetime or testamentary planning. The estate planning lawyers at Gibson&Perkins have the background and experience to help you in achieving your charitable objectives. The appropriate estate planning  may include all or some of the following:

Private Foundations

A private foundation is an independent legal entity set up for solely charitable purposes. Unlike a public charity, which relies on public fundraising to support its activities, the funding for a private foundation typically comes from a single individual, a family, or a corporation, which receives a tax deduction for donations.

The word “foundation” is commonly incorporated into the names of many different types of nonprofits (e.g., The Susan G. Komen Foundation, The Bill and Melinda Gates Foundation, Make-A-Wish Foundation). But not all of these “charitable foundations” are private foundations. In fact, a private foundation is a very specific and distinct type of charitable foundation.

Both public charities and private foundations are classified as tax-exempt, 501(c)(3) organizations by the IRS. However, the major difference between a private foundation, like The Bill and Melinda Gates Foundation, and a public charity, like the Make-A-Wish Foundation, is where they derive their financial support. While a public charity gets its funding from the general public, a private foundation usually has one source of funding, typically an individual, family, or corporation.


Because a private foundation stays under the control of the donor, you determine:

  • The foundation’s mission;

  • Whom to include on the foundation board;

  • Where the funds are invested; and

  • How and where funds are given away.


And, because the foundation can be set up with the intent to exist in perpetuity, your charitable giving can continue as long as your foundation exists. In this way, it can become a living family heirloom that’s passed from one generation to the next.

Charitable Remainder Trust (CRT)

A CRT lets you convert a highly appreciated asset (like stocks or investment real estate) into a lifetime income without paying capital gains tax when the asset is sold. It also reduces your income and estate taxes, and lets you benefit a charity that has special meaning to you. With a CRT, you transfer the asset to an irrevocable trust. This removes it from your estate. You also get an immediate charitable income tax deduction. The trust then sells the asset at market value, paying no capital gains tax, and reinvests in income-producing assets. For the rest of your life, the trust pays you an income. Since the principal has not been reduced by capital gains tax, you can receive more income over your lifetime than if you had sold the asset yourself. After you die, the trust assets go to the charity you have chosen.


Charitable Lead Trust (CLT)


A CLT is just about the opposite of a CRT. You transfer an asset to the trust, which reduces the size of your estate and saves estate taxes. But instead of paying the income to you, the trust pays it to a charity for a set number of years or until you die. After the trust ends, the trust assets will go to your spouse, children or other beneficiaries.

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