Recently there was talk in financial circles about the “Billionaire Challenge.” Two of the wealthiest individuals in the United States, Warren Buffett and Bill Gates, challenged those in the same financial stratosphere to give away at least half of their wealth over the course of their lives. Buffett has pledged to give away most of his fortune, and he has already donated billions to the Bill and Melinda Gates Foundation.
While only a precious few individuals have the type of resources that these men have, a lot of people have an interest in giving something to charity when they are planning their estates. The creation and maintenance of a private family foundation can be quite expensive so this is not always a practical option.
A very viable alternative exists in the form of donor advised funds. With these funds, you make a donation and then advise the fund with regard to the grants that will be endowed. As a result, you can provide resources for multiple different charities through a single donation into the fund. This makes your accounting simpler and the expenses are minimal because the fund already has the necessary infrastructure in place.
Charitable remainder trusts are another way you can be charitable and at the same time maximize income and tax breaks. A charitable remainder trust combines current charitable income tax deductions and future estate tax deductions with the opportunity to avoid capital gains tax on a highly appreciated asset. It also provides a new source of income.
There are tax advantages to be gained by donating resources into a donor advised fund and to setting up a charitable remainder trust. To explore these advantages in depth, take a moment to arrange for a consultation with a Bay Area estate planning attorney who has experience assisting clients with philanthropic goals.