charitable planning presentation

CHARITABLE PLANNING: TOOLS TO IMPLEMENT YOUR GENEROSITY

P. Haans Mulder, JD, MST, CFP®

Cunningham Dalman, P.C.321 Settlers RoadHolland, MI 49423(616) 392-1821phmulder@holland-law.com

Holland Museum

Background• Partner at Cunningham Dalman, P.C.• Masters in Tax, CFP®, and specialize in

estates/elder law and business planning• Cunningham Dalman, P.C. has been serving

the greater Holland/Zeeland since 1900

Serving the Holland area since 1900

Overview• Background assumptions• Common client goals• Status on estate taxes• Vehicles for charitable planning

Serving the Holland area since 1900

Background Assumptions• You have an estate plan• You are charitably inclined• You need to plan for estate taxes (i.e.

high net worth)• Only have time to cover general

concepts

Serving the Holland area since 1900

Common Client Goals• Give money to charity and children• Create a stream of income • Get children involved in philanthropy• Avoid or minimize estate taxes• Minimize income taxes

Serving the Holland area since 1900

Status of Estate Tax Laws

?Serving the Holland area since 1900

Status of Estate Tax Laws• Plan for the worst, but hope for the

best…• Worst is exemption will be $1 million in

2011 and will stay at that level• Possible exemption will be $3-5 million

Serving the Holland area since 1900

Vehicles for Charitable Planning• Outright gifts• Split-interest gifts• Gifts tied to a charity or the community

foundation• Permanent structure for giving

Serving the Holland area since 1900

Outright Gifts• Variety of assets to use• Simple to do• Tax benefit for gifting appreciated

property• Be aware of charitable deduction

limitations

Serving the Holland area since 1900

Split-Interest Gifts • Gift is “split” between a charity and an

individual or individuals (which could include yourself)

• Charitable remainder trusts• Charitable lead trusts

Serving the Holland area since 1900

Charitable Remainder Trusts

• Charitable remainder annuity trust (CRAT)

• Charitable remainder unitrust (CRUT)• Pays an amount to an individual or

individuals for period of time and remainder to charity

Serving the Holland area since 1900

Split-Interest Gifts (CRAT)• An annuity is paid to an individual or

individuals for a term of years (20 at most) or life and remainder goes to charity

• Diversifying of investments and predictable income stream

• No transfer tax benefitServing the Holland area since 1900

Split-Interest Gifts (CRUT)• A certain percentage of the initial trust

assets is paid to an individual or individuals for a term of years (20 at most) or life and remainder goes to charity

• Helpful way to protect against inflation• Payments will vary

Serving the Holland area since 1900

Charitable Lead Trusts• Charitable lead annuity trust (CLAT)• Charitable lead unitrust (CLUT)• Benefit to charity for period of time

and remainder to an individual or individuals for terms of years (20 at most) or life

Serving the Holland area since 1900

Split-Interest Gifts (CLAT)• An annuity is paid to a charity and

remainder goes to individuals• Beneficial when interest rates are low

and already planning on making gifts• If investments don’t perform, there will

not be a distribution to remainder individuals

Serving the Holland area since 1900

Split-Interest Gifts (CLUT)• A certain percentage of the trust

assets is paid to a charity for a term of years and remainder goes to individuals

• Will always allow for a distribution to individuals

• Less tax benefitServing the Holland area since 1900

Gifts Tied to a Charity or the Community Foundation

• Charitable annuity• Donor advised fund• Supporting organization

Serving the Holland area since 1900

Supporting Organization• Establish a nonprofit organization and

“supports” an existing charity• Have control over gifts and less

complicated than private foundation• Not as much control as private

foundation

Serving the Holland area since 1900

Permanent Structure for Giving• Private Foundation • Donor forms a trust or a nonprofit

corporation and makes gifts to the foundation

• Foundation grants money to charities

Serving the Holland area since 1900

Private Foundation• Allows for greater control/flexibility

over gifts and involvement of children in philanthropy

• Very expensive to setup/administer and complicated rules to comply with

Serving the Holland area since 1900

Thank YouP. Haans Mulder, JD, MST, CFP®

Cunningham Dalman, P.C.321 Settlers RoadHolland, MI 49423(616) 392-1821phmulder@holland-law.comwww.holland-law.com

Serving the Holland area since 1900