Tips for including charitable giving in your estate planning

Billionaire hedge fund manager David Einhorn recently announced that his family’s charitable trust would be making a $50 million gift to his alma mater over a time frame of ten years. The purpose of the pledge will be to enable more Cornell students to receive meaningful real-world experiences, beyond the perimeter of their college campus. 

Although an individual may want to include charitable giving in his or her estate plans, it may be hard to estimate amounts. For example, in the event of an unexpected health issue that requires long-term care, charitable giving plans may need to be adjusted.

Yet estate planning can account for such variables. As readers might have guessed, there are several trust options available for charitable giving, such as a charitable remainder annuity trust, or CRAT.

A charitable annuity trust is often handled directly by the recipient organization. The charitable donor transfers assets to the trust, which pays the beneficiary a fixed dollar amount, set at the time the trust was established.

Another option is a charitable remainder unitrust, or CRUT, which pays the beneficiary a fixed percentage of the principal of the trust. The trust principal is also revalued each year. Unlike a charitable remainder annuity trust, the donor retains the flexibility to make additional gifts to this type of trust. 

With the help of an attorney that focuses on estate planning, an individual can safely include charitable giving in his or her financial plans, while still planning for the unexpected, such as incapacity or designating a power of attorney for medical decision-making.

Source: Forbes, “Billionaire David Einhorn Pledges $50 Million For New Cornell Program,” Nathan Vardi, Oct. 6, 2014

Source: Investopedia, “Estate Planning: Charitable Trusts,” Cathy Pareto

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