RenPSG | Blog
For Love of the Hyphen…
The winds of change blow constantly across the philanthropic landscape. Legislation, donor transparency, even social media, have swept through the industry at different times to shake-up the status quo. Here at Renaissance we decided it was time to kick-up a little dust for a cause we strongly believe is not getting the attention it deserves: the hyphen.
What is a DAF?
According to National Philanthropic Trust’s 2014 Donor-Advised Fund Report, in 2013 there were approximately 217,367 donor-advised fund (DAF) accounts in the United States valued at more than $53.74 billion. In contrast, in 2007 there were approximately 161,941 DAF accounts valued at more than $31.97 billion, an increase of 34.2% in new DAF accounts and 68.1% in assets.
Donors use DAFs because they are simple to create, highly flexible, and provide superior income tax charitable deductions when compared to private foundations. The benefits of using a DAF include:
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- DAFs are easy to create (most DAFs are created by completing a brief application);
- DAFs are flexible;
- Most organizations that sponsor DAF programs accept contributions of not only cash, but also marketable securities and may accept real property and closely-held business interests;
- Many DAF programs offer an array of investment options and support a variety of grantmaking approaches;
- Unlike grants from private foundations, grants from a DAF can be truly anonymous;
- Donors frequently contribute appreciated assets because they are allowed a deduction for the full value of the gift while avoiding recognizing the capital gain when the Sponsor sells the contributed assets; and
- A gift to a DAF is a gift to a public charity, which qualifies for maximum deductibility.
Using a CRT to Sell a Business: Part 2
Suitability Key to Utilizing a CRT to Sell a Business
In Part 1 of this two-part series, we met a business owner confronted with the need to reduce the tax bite arising from implementing an exit strategy from his family business. We introduced a CRT as a component of an overall strategy to avoid capital gains and net investment income tax, create a significant income tax deduction, provide the business owner with income for life, and fund a significant charitable gift at death. In Part 2, we will discuss four suitability considerations in creating a CRT and explore ways to avoid the two most common hazards encountered when using a CRT to sell a business.
Using a CRT to Sell a Business
A charitable remainder trust is a powerful technique to reduce the tax burden on the sale of a family business.
Understanding the CRT 10% Remainder Test
One of the most misunderstood rules in the world of charitable remainder trusts (CRTs) is the so-called “10% remainder test.” For lawyers and accountants reading this blog post, the test is found at Internal Revenue Code Sec. 664(d)(1)(D) for charitable remainder annuity trusts (CRATs) and Sec. 664(d)(2)(D) for charitable remainder unitrusts (CRUTs).
What is a Charitable Remainder Trust?
A charitable remainder trust, or CRT, enables donors to set aside assets for the future benefit of a charity while receiving income for life.
A CRT is tax exempt A CRT is tax-exempt. Accordingly, it is not subject to tax on its income or capital gains. As a tax-exempt trust, a CRT is an ideal method for selling an appreciated asset and avoiding the resulting tax liability while retaining an income stream for life. Read More »What is a Charitable Remainder Trust?
Strategically Late on Charitable Giving…
The first blog post was created sometime in the late ’90s, and less than 10 years later, blogging was mainstream. How mainstream? Today, there are over 152 million blogs and counting.
So why is Renaissance jumping in now?
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