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www.privateairny.com Private Air New York | Fall 2016 48 PHILANTROPHY Charitable remainder trust. With a CRT, the donor receives a stream of income for a term of years, or the remainder of his or her life, from a trust established as a split- interest trust. After the term expires or the donor dies, the assets remaining in the trust pass to one or more charities, which can be selected when the trust is created or later. In a CRT, a charitable deduction is allowed when the trust is funded. e deduction is equal to the present value of the remainder interest that will pass to charity. e size of the deduction depends on the structure of the trust and the level of IRS- mandated interest rates at the time of the contribution. Charitable lead trust. Someone who has ample money to live can consider a CLT, which works the opposite way of a CRT. Here the income stream is paid to the charity over a term of years or your lifetime. Any assets remaining in the trust can revert to the donor or pass to the heirs. One advantage of a CLT is that the remainder can be structured to pass to your heirs. If there are outsized gains in the securities within the CLT since the contribution, a portion of the excess appreciation will pass to your heirs free of gift and/or estate tax. Your own foundation. You don't have to be a Bill Gates or a Warren Buffet, but a foundation makes sense only for people who can afford to give away millions. Private foundations sponsor or aid charitable, educational, religious or other activities serving the public good, primarily by making grants to other nonprofit organizations. Besides providing a tax deduction, up to IRS limits, a foundation can create visibility and influence for family members, and remind everyone of the family's generosity. But foundations can be expensive to run and administer, with required startup legal fees, ongoing meeting expenses, administration fees and investment- management fees. With a smart strategy, you can maximize the impact of your dollars on charity and your wealth. With lower taxes and more wealth, you'll have more to give away next year. *Besides securities, the 30 percent AGI limit applies to any property such as land, works of art, etc. that would produce a long-term capital gain if sold by the donor. To further complicate things, the rules distinguish gifts to a charity from gifts for the use of a charity, with lower limits on the latter. ere are appraisal requirements for larger gifts. e rules can be very complex, so consultant an expert, especially when large sums are involved. Eric Meermann is a portfolio and client service manager with Palisades Hudson Financial Group, a financial advisor in Scarsdale specializing in serving high-net worth clients. He holds the Certified Valuation Analyst (CVA) and Certified Financial Planner (CFP®) designations and is an IRS Enrolled Agent (EA). He can be reached at eric@palisadeshudson.com. Palisades Hudson also has offices in Atlanta, Georgia; Fort Lauderdale, Florida; Austin, Texas; and Portland, Oregon. "One Advantage of a Charitable Lead Trust is that the Remainder can be Structured to Pass to your Heirs."

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