Reason Number Four: PHILANTHROPIC GIVING
Currently, you may gift up to $16,000 ($32,000 for couples) per year to any number of individuals
without triggering gift taxes. Gifts in excess of this amount are applied against your lifetime gift tax
exemption. If you utilize any lifetime gift tax exemption during your lifetime, simply put, it would
conversely reduce the federal estate tax exemption available to the person making the gift by that
amount.
For larger gifts, you may wish to consider using a trust to help you retain control and use of your current
assets while leaving the remaining balance for the charitable organization(s) of your choice. Another
advantage of today’s estate planning strategies is the current low-interest-rate environment, which can
reduce the taxable value of transferred assets.
For example, consider establishing a charitable lead annuity trust (CLAT), which is designed to generate
a larger tax deduction in a low-interest-rate environment. You may fund a CLAT with cash, investments, and even life insurance. Over the term of the trust, the CLAT will provide a fixed annuity payment to the
charitable organization of your choice, including a donor-advised fund, while continuing to earn interest.
At the end of the term, the remaining balance in the trust is transferred to your beneficiaries (not the
charity). Due to the current low discount rate used in calculating the amount of the lead payments to
the charity, your individual beneficiaries may receive a significantly higher amount at the end of the
trust term. For most CLATs, you may take a one-time income tax deduction in the year the trust is
funded.
While it may appear that provisions of the Tax Cuts and Jobs Act have hampered tax-advantaged
philanthropic strategies for some, charitable tax deductions remain as viable as ever. Carefully consider
the role of a trust to take full advantage of today’s transfer strategies when planning philanthropic gifts.
Changes in tax laws or regulations may occur at any time and could substantially impact your situation. Raymond James
financial advisors do not render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate
professional.
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