Charitable Gift Planning Trends
Southeast Wealth Management Business, January 2009


Legislative Climate — If income or capital gains tax rates are increased, the tax savings associated with a lifetime charitable gift are correspondingly increased. In addition, if Congress passes estate tax legislation that fixes the exemption amount and tax rates, a thaw applied to the chilling effect from the current uncertainty would prove helpful to planners generally.

Scrutiny of Charitable Gift Structures — The IRS continues to identify transactions that are "of interest" or reportable tax-shelter-type transactions that relate to a charitable gift vehicle. For instance, the IRS recently issued Notice 2008-99, in which a sale of all interests in a CRT resulted in the grantor receiving the value of their trust interests, while claiming to recognize little or no taxable gain. To the extent donors (and their advisors) continue to push beyond the intent of the law, charitable gift transactions may be treated as a tax shelter, as opposed to a vehicle which promotes philanthropy, and where appropriate, the financial and estate planning goals of the donor.

Don't Forget Other Legitimate Uses — Benefits aside from a client's tax considerations may be achieved through a charitable gift structure. For instance, clients still need assistance with respect to business succession planning. Integrating a philanthropic element into a business succession plan may be the catalyst to consummate an often emotionally charged transaction and may, at the same time, provide maximum tax and financial planning advantages. In addition, as our population ages, they may be less interested in actively managing or owning real estate, and a charitable gift of such property can remove that responsibility. Lastly, a CRT may provide income for a loved one for his or her life and at the same time diversify a significant holding without incurring an immediate tax on sale.

Jonathan Ackerman, 2002 President of NCPG (now known as Partnership for Philanthropic Planning), represents donors and tax-exempt organizations on a national basis. His advice is often sought by charities in their creation and operation, especially with respect to contributions and other funding opportunities, as well as by families (and their advisors) who desire to integrate philanthropy into their estate plans.