Analysis of Various Gifting Strategies

Fair number of Gifting Strategies is available in case of planned giving. Each has its own merits and demerits.

You would opt for charitable lead trust over an Outright Gift because in the case of the former the gift gets transferred to the trust and the recipient can receive the income from it. In the event of your death your loved ones will receive the principal with virtually no liability of a tax.

A pooled income fund, a charitable remainder annuity trust, or a pooled income fund can be chosen if one wants to keep an income interest. With all these strategies, you get the income while your heir gets the principal at the time of your death.

You can also make a large gift in future at a comparatively lower cost by purchasing a Life Insurance policy in the name of the charitable organization who shall be the owner as well as the beneficiary.

Outright Gift

You get income deduction but no interest is retained.

Charitable Lead Trust

You earn current pleasure of giving along with deduction in Income Tax. A future discount can be availed while the assets get passed to the heirs. Some of its disadvantages are that asset transfer is completely irrevocable. If you enjoy deduction on income currently, the donor pays the tax burden on future income. Also for life of the trust the use of income will be given up by the donor

Pooled Income Fund

You get deduction in income while generating income for the beneficiary for the lifetime. Another advantage is that the non-income producing assets get converted to income-producing assets. Some concern areas, however, are the income received is uncertain and gets taxed. Only one charity can receive the remainder interest.

A Charitable Remainder Annuity Trust

You get fixed income along with tax deduction. Capital gain tax on the appreciated property can be avoided. But it requires a qualified appraisal along with complex set up and administration.

Charitable Remainder Unitrust

Income tax deduction can be availed currently and Estate Taxes get reduced in future. Also, on the appreciated property, capital gain tax can be avoided. The asset transfer is however irrevocable. Also it requires a qualified appraisal along with complex set up and administration.

Insurance Gifts

At a small cost you can gift a large gift along with deduction in income tax. Annual premiums may be required whereas death benefit could become part of taxable estate of the donor.