CWG Insight Series: Getting creative with your charity and legacy planning

When you think about your legacy, what comes to mind? How much money your kids will be left with? The property in the mountains you have so many great memories in?  Does your impact on the community surface?

Zac O’Brien, our Personal CFO that runs the Advance, NC Crown office worked with a client that felt the need to teach his family the importance of charitable giving.   Historically, this client and his wife donated $50,000 annually to one or two local charities that resonated most with their giving desires.  Zac worked with their estate planning attorney to update their structure which now included a Charitable Trust for a large portion of their estate.  Their children and eventually grandchildren would be responsible for how the donations would be distributed.   

Now this is a large family we are talking about, 4 children, 10 grandchildren and 3 great grandchildren.   How do you prepare the family to make these decisions once the client has passed?  It was decided that the client was going to have the grandkids “compete” for the charity of their choice. The winner’s charity would receive $20,000 and the other 9 received $3,000 each. They wanted their grandkids to come to Thanksgiving with a presentation on their charity and why that charity would be the best recipient for the funds. The family wanted to know the name of the organization, the current CEO/President, the mission of the charity and the grandkids would have 5 minutes each to present their choice.

Over time this has morphed from a poster board and a few short answers to the grandkids getting interviews with charity CEOs to learn more about the community impact and coming to Thanksgiving with full blown PowerPoint presentations. It is a family event that has no losers, and the grandkids are actually sitting on some of the boards they were fighting for in the past. The family took a “game” and have created a tradition and legacy that will be passed down for generations.

This is just one example of how to get creative with your giving and your Crown Personal CFO can help you create a unique generational giving strategy too.  As we enter the 4th quarter of 2020, our team is looking to identify additional tax strategies that can help our clients reduce their tax liabilities.  2020 is an especially unique year with the COVID-19 pandemic still upon us, but there was legislation passed that we can take advantage of.  As a part of the 2020 CARES ACT, individuals and corporations that itemize deductions on their tax returns can deduct much greater amounts of their contributions.

Individuals can elect to deduct cash contributions, up to 100% of their 2020 adjusted gross income (AGI), on their 2020 tax returns. This is up from the previous limit of 60%.

Corporations may deduct up to 25% of taxable income, up from the previous limit of 10%.

It is important to note that the increased deduction is only for cash gifts that go to a public charity, more specifically a 501(c)(3). If you give cash to, say, your private foundation, like a Donor Advised Fund (DAF) the old deduction rules apply. And while the organizations that manage DAF’s are public charities, you do not get the higher deduction for donating cash to your DAF. These new limits do not apply to gifts of appreciated stock.

If you were planning on being particularly generous to a favorite charity, 2020 is the year to do it.   You could effectively eliminate your income and IRS taxes with it!