IRS issues publications on many tax topics. An especially valuable publication for charitable gift planners is Pub 526, “Charitable Contributions”. Pub 526 is updated each year, so if you download it, try to get the most recent version. Like all IRS publications, Pub 526 technically cannot be relied upon, in the sense that IRS is …Read More
This question arises all the time. How do we think about it? The starting point is the trustee of the trust. The trustee holds legal title to all trust assets. That is, holds legal title for local law purposes. If the trust is revocable by its creator, the creator is deemed to own all the …Read More
In the shadow of the press surrounding Duke University’s recent suit against a donor’s estate (and subsequently dropping of said suit), we’ll look at another case that bears resemblance and how the courts ruled on it. The 1974 Jordan Case is an important state court case on the enforceability of pledges. It arose because an individual …Read More
Last time, we saw that there is the “plain vanilla” CLAT, for which the donor gets a gift tax charitable deduction but not an income tax charitable deduction. We also saw that it’s possible to set up a CLAT so that the donor does get an up-front income tax charitable deduction in addition to a …Read More
Last time, we looked at a Charitable Lead Annuity Trust example. An example of a 12-year CLAT funded with $1 million of cash, which is to pay $50,000 a year (a 5-percent payout) to charity and then distribute its assets to Donor’s daughter. Question: How much will the daughter receive? No one knows for sure. …Read More
It’s now time for a CLAT example, to see how this thing works. Let’s suppose Donor creates a CLAT with $1 million in cash. The CLAT is to pay $50,000 a year to Charity for 12 years and then distribute all of its assets to Donor’s daughter, Sue. This fact pattern is as plain vanilla …Read More
Last time, we drilled down into the charitable lead annuity trust (CLAT). We saw that the CLAT may be set up to run for either a fixed term of years or an individual’s life (subject to restrictions); the CLAT is used not only to fund a charitable project but also to transfer substantial assets downstream; …Read More
Time to take a closer look at the charitable lead annuity trust (CLAT). The CLAT comes in several flavors; we’re going to start with plain vanilla. The plain vanilla CLAT makes a fixed payout to charity at least annually (e.g., $25,000 a year) for a term prescribed by the donor and then, typically, distributes its …Read More
A lead trust is a trust that [1] makes payments to one or more charities for a donor-prescribed period, and then [2] distributes its assets to one or more persons. It’s called a lead trust because the charitable interest in the trust leads, or precedes in time, the non-charitable interest. Certain lead trusts work well …Read More
By Jon Tidd This question is important for several reasons. One is that charities named as IRA beneficiaries are often required by IRA custodian financial institutions to establish inherited IRAs in order to receive the benefit to which the charity is entitled. The answer is provided by section 408(d)(3)(C)(ii) of the Internal Revenue Code: (ii) …Read More