Charitable Planning

Worthwhile charitable organizations improve the quality of life in a community and make a difference in peoples’ lives. Planned charitable giving is a process to create a legacy of support for your charitable interests, honor your values and help future generations.

Planned charitable gifts can provide significant tax benefits and lifetime income for you and your family and direct support to a charity or non-profit institution.

If you intend to make a charitable donation of significant size during your lifetime or after you pass away, you should speak with a knowledgeable estate planning attorney at Brady Cobin Law Group, PLLC about incorporating the gift into an estate plan.

For more than 35 years, our dedicated Raleigh attorneys have helped people throughout North Carolina craft estate plans to minimize the impact of taxes and provide for the future financial security of those they love.

Our attorneys’ primary focus is estate planning and elder law. We can help you with charitable planning and ensure that your planned giving is set up properly—with both tax-advantaged and philanthropic considerations in mind.

Founding partner R. Daniel Brady has been practicing law since 1982 and is recognized by the North Carolina State Bar as a Board-Certified Specialist in Estate Planning and Probate Law, a distinction held by only a small percentage of lawyers in North Carolina.

Dan also brings detailed financial knowledge of a Certified Public Accountant to handle the tax issues that arise as part of charitable planning. Attorney Andrew J. Cobin focuses on helping individuals and families build more financially secure lives through careful estate planning.

Before going into private practice, Andrew previously served as a judge advocate general in the U.S. Navy for seven years. The attorneys at Brady Cobin Law Group, PLLC focus on understanding our clients’ financial needs and goals and building quality, long-lasting attorney-client relationships.

Our compassion and respect for our clients guide the legal service we provide to honor clients’ lives, aspirations, and charitable interests.

What is Planned Charitable Giving?

A planned charitable gift is a substantial gift made either in your lifetime or after death as part of your estate plan. Charitable planning is the process of structuring the giving as part of an estate plan.

Planned gifts make use of legal strategies to provide significant tax benefits and also lifetime income for you and your family while supporting worthy charitable organizations.

Planned gifts allow you to:

• Provide inheritances for heirs while reducing their tax liability
• Reduce your taxes on ordinary income
• Avoid capital gains taxes on appreciated assets
• Establish a legacy to benefit future generations.

Charitable gift planning can be a simple process.

Many people make testamentary bequests to charities in their wills. You may make a bequest or gift from your estate to a charity or non-profit organization by including a provision in your will designating the charity as a beneficiary of a bank account, retirement account, securities, life insurance policy, or other assets.

You may also make a life income gift to a charity through a charitable trust that provides you or your beneficiaries with income for a period of time.

Types of Charitable Trusts in North Carolina

Trusts can be a beneficial tool as part of estate planning, but they are complex to structure and require the help of legal professionals. Our charitable planning attorneys at Brady Cobin Law Group PLLC can help you understand how charitable trusts work and allow you to integrate your values into your planned giving.

We will talk with you about your financial goals, get an understanding of the various assets you wish to convey, and discuss the advantages and disadvantages of various kinds of charitable trust vehicles. Together, we will decide which type of charitable trust is most suitable for the goals you wish to accomplish.

There are two types of charitable split-interest trusts. They are charitable remainder trusts and charitable lead trusts. These types of trusts divide the assets between a charity and a noncharitable beneficiary (such as your children or grandchildren). The key difference between the two types of trusts is the order in which the charity and the other beneficiaries receive the gift.

Charitable Remainder Trusts

Charitable remainder trusts are a popular option for planned giving. A charitable remainder trust is a type of trust created by federal law that provides annual income to you or others for life while allowing you to make a generous tax-advantaged gift to a worthy charity. The benefits of a charitable remainder trust include:

• Maintaining an income stream
• Receiving a tax deduction
• Avoiding capital gains taxes on appreciated assets
• Minimizing estate taxes
• Directing deferred gifts to favorite charities

You place an amount of money or other assets in a trust that is invested and generates a long-term stream of income for two or more designated individuals while deferring the capital gains tax on the assets moved into the trust.

You receive an immediate income tax charitable deduction based on a percentage of the trust’s original value. Upon the death of the last surviving recipient, the assets of the trust are distributed to one or more charitable organizations.

The asset transfer to create the trust is not counted as part of your estate for the purposes of calculating your federal estate tax and probate fees. A trustee such as an accountant, attorney, or bank typically administers the trust.

There are two types of charitable remainder trusts:

• A charitable remainder unitrust
• A charitable remainder annuity trust.

A charitable remainder unitrust (CRUT) pays a variable income based on the fair market value of the trust’s assets, which are revalued each year. The Internal Revenue Code creates several variations of a unitrust.

A charitable remainder annuity trust (CRAT) pays a fixed amount each year that is computed by multiplying the trust payout rate by the original market value of the trust. The amount paid remains the same for the term of the payments. Upon the passing of the last surviving income recipient, the assets of the trust are dispersed to one or more designated charitable organizations.

Charitable Lead Trusts

This type of trust provides immediate income payments to the charity or charities that you select for a specified length of time or until the donor’s death. At the end of the term, your beneficiaries (for example, your grandchildren or children) receive the remaining principal in the trust.

The charities you choose may receive either a fixed annuity payment or a specified percentage of the trust assets each year, which will vary from year to year. The term of the charitable lead trust is the length of time during which the charity is to receive payments.

A charitable lead trust can offer significant tax savings if some trust income goes to charity for several years. At the end of the specified period, the trust assets pass to you or to the beneficiaries that you have designated to have a remainder interest in the assets of the trust. Your heirs may receive the appreciation of the assets with no added tax consequences.

The two types of charitable lead trusts are:

• A charitable lead unitrust
• A charitable lead annuity trust.

A charitable lead unitrust (CLUT) pays a designated charity or multiple charities a specified percentage of the assets of the trust for a period of time. The annual payments are variable since they are based on a percentage of the assets held in trust.

A charitable lead annuity trust (CLAT) pays a designated charity or charities fixed annual payments for a specified period. All assets are contributed to the creation of the CLAT, and no additional contributions are allowed.

Charitable giving is a great way to support your favorite non-profit organizations and reduce the impact of estate taxes. Planned giving can help you make significant gifts that benefit both the charity and your family and loved ones.

Our experienced Raleigh estate planning lawyers understand the many considerations that go into a carefully considered estate plan and plan for charitable giving.

We have years of experience and knowledge of North Carolina trusts and estates law to help you plan carefully for the future. Contact our Raleigh charitable planning lawyers today to discuss how we can assist you.

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