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Planning for Change: Estate Reduction through Charitable Giving

The estate tax exemption doubled under the Tax Cuts and Jobs Act (TCJA) of 2017. With annual increases for inflation, it is now $13.61 million. However, this provision is scheduled to “sunset” at the end of 2025—if Congress doesn’t act, the exemption amount will drop into the $6-7 million range. If your estate is over $6 million (or may reach that level by 2026), now is the time to start considering and implementing strategies to minimize the tax impact and leave more for your heirs.

No matter your financial situation, charitable giving can be an important part of your estate plan, even if you are not impacted by this potential change. We are always available to assist with your planning.

If you want to leave a philanthropic legacy, you can arrange a gift that supports Citizens & Scholars, removes assets from your estate (thereby potentially reducing the amount of estate tax you owe), and possibly provides personal benefits now and other tax benefits as well. Consider the following options:

  • A charitable remainder trust (CRT). A CRT combines an income for you and/or other beneficiaries (for life or for a period of up to 20 years) with a charitable gift of whatever remains in the trust at the end of the payment period. It can be a bit complex, but it offers the flexibility to meet a variety of planning goals. It qualifies for an income tax deduction for the present value of the anticipated remainder interest. Read more about charitable remainder trusts.
  • A charitable lead trust (CLT). This trust makes payments to us first, then distributes the remainder to named beneficiaries (typically family members). This minimizes estate and inheritance taxes for the beneficiaries. Read more about charitable lead trusts.
  • A donor-advised fund (DAF). A DAF removes assets from your estate and puts them in a managed account. This qualifies for a current charitable income tax deduction, even though you can recommend grants to qualifying charities like ours at any point in the future. You may also be able to name Citizens & Scholars as the beneficiary of whatever remains in the DAF upon your death. Read more about donor-advised funds.

As you make plans for your estate, we thank you for considering ways to make a significant and enduring impact on Citizens & Scholars and those we serve. Please reach out if you are interested in exploring these charitable giving options further. We are happy to assist you and your advisors in determining a planned giving strategy that aligns with your values and goals.