Giving more to the causes you care about and less to the IRS is not a contradiction.

Most people approach charitable giving one of two ways. They write checks to organizations they believe in and don't think much about the tax side. Or they hear about charitable trusts and donor advised funds from a financial advisor and wonder whether the complexity is worth it.

The clients who get the most out of charitable planning are usually the ones who realize those two approaches don't have to be separate. A well-structured charitable plan amplifies the impact of your giving, reduces your tax burden in ways that free up more resources for the causes you care about, and integrates with your broader estate plan so your charitable intentions survive beyond your lifetime.

We work with clients across both ends of that spectrum — those who start with a charitable goal and want to understand the tax implications, and those who start with a tax problem and discover that charitable tools offer the most elegant solution.

Donor Advised Funds

A donor advised fund is the simplest entry point into structured charitable giving. You contribute assets to a sponsoring organization — a community foundation or a financial institution like Fidelity Charitable or Schwab Charitable — take an immediate income tax deduction, and then recommend grants to specific charities over time at your own pace.

The contribution is irrevocable, but you're not required to distribute it immediately. Assets inside the DAF can be invested and grow tax-free until you're ready to give. This structure is particularly useful for clients who have a high-income year — a business sale, a large bonus, or a significant capital gain — and want to capture a deduction now while deciding later which organizations to support.

Contributing appreciated securities directly to a DAF rather than selling them first eliminates the capital gains tax on the appreciation entirely. The deduction is based on the full fair market value of the securities on the date of contribution.

Charitable Remainder Trusts

A charitable remainder trust is an irrevocable trust that pays an income stream to you or other named beneficiaries for a period of years or for life, with the remaining assets passing to one or more charities at the end of the trust term.

The mechanics make it particularly useful for clients holding highly appreciated, low-basis assets — real estate, concentrated stock positions, or a business interest — who want to diversify without triggering a large capital gains tax. When you transfer an appreciated asset into a CRT, the trust can sell it without paying capital gains tax, reinvest the proceeds, and pay you a higher income stream than you'd receive if you sold the asset yourself and paid the tax first.

You also receive a partial charitable income tax deduction at the time of contribution, based on the present value of the charitable remainder interest.

Two common structures: a Charitable Remainder Annuity Trust pays a fixed dollar amount each year. A Charitable Remainder Unitrust pays a fixed percentage of the trust's value, recalculated annually — which means payments can grow if the trust performs well.

Charitable Lead Trusts

A charitable lead trust works in the opposite direction from a CRT. The charity receives the income stream first, for a specified term, and your family receives the remaining assets at the end.

This structure is useful for clients who want to transfer appreciating assets to the next generation at a reduced gift or estate tax cost. The taxable gift is reduced by the present value of the income stream going to charity, which can be significant depending on the trust term and payout rate. If the trust assets grow faster than the IRS discount rate during the term, the excess passes to your beneficiaries free of additional gift or estate tax.

A Charitable Lead Annuity Trust, the more common structure, pays a fixed dollar amount to charity each year. This can be structured so that the present value of the charitable payments equals the full value of the assets transferred, resulting in a gift of zero for tax purposes — sometimes called a "zeroed-out" CLAT.

Qualified Charitable Distributions from IRAs

For clients over age 70½, a qualified charitable distribution allows you to transfer up to $105,000 per year directly from an IRA to a qualified charity. The distribution counts toward your required minimum distribution for the year but is excluded from your taxable income entirely.

This is a straightforward and underused strategy. For clients who are charitably inclined and taking RMDs they don't need for living expenses, a QCD reduces taxable income dollar for dollar compared to taking the distribution and then making a separate charitable contribution. The deduction approach has limits and phaseouts that a QCD sidesteps entirely.

The limit adjusts for inflation annually. Contributions must go directly from the IRA custodian to the charity — a distribution paid to you first and then donated does not qualify.

How Charitable Planning Fits Into Your Estate Plan

Charitable planning doesn't exist in isolation. A CRT or CLT interacts with your estate tax exposure, your income tax situation, and how you've structured your trust. A DAF funded with appreciated securities from a concentrated position interacts with your overall investment strategy.

We coordinate with your financial advisor and CPA to make sure the charitable structures we put in place work correctly alongside everything else. The goal is a plan where your charitable intentions, your family's financial security, and your tax position are all working in the same direction.

What It Costs

Charitable planning work is flat-fee for standard structures like DAF establishment guidance and QCD planning. Trust structures like CRTs and CLTs are quoted based on complexity. You'll know the cost before committing to anything.

Frequently Asked Questions