Charitable Planning in California

Serving Families of Los Angeles, Calabasas, Westlake Village and San Fernando Valley, CA


At SSS Legal & Consultancy Services, we help clients make charitable gifts in the most tax-efficient manner. Charitable giving is personally rewarding, and it can also provide considerable tax savings. Some charitable giving strategies can save capital gains taxes, increase income, and provide beneficiaries with an income for life. A charitable plan can be set up as part of your revocable living trust planning, coming into existence at the time of your death, or as a stand-alone plan during your lifetime.  Below are examples of techniques used in our tax and charitable planning process.

 

Charitable Lead Trust

The Charitable Lead Trust is a type of charitable trust that can reduce or virtually eliminate all estate tax on wealth passing to heirs. In order to accomplish this goal, you create a trust that grants to a charity or charities, for a set number of years, the first or ‘lead’ right to receive a payment from the trust. At the end of the term of years, your children or grandchildren receive the balance of the trust property which often is greater than the amount contributed, free of estate tax in most instances. The remainder interest ultimately passing to the heirs, however, will be affected by the performance of the trust’s investments.

Charitable Lead Annuity Trusts are particularly suited for hard-to-value assets (such as real estate or family limited liability company interests) and assets which are expected to appreciate in value.

 

Charitable Remainder Trust

The Charitable Remainder Trust (‘CRT’) is a type of trust specifically authorized by the Internal Revenue Code. These irrevocable trusts permit you to transfer ownership of assets to the trust in exchange for an income stream to the person or persons of your choice (typically you, your spouse or you and your spouse) for life or for a specified term of up to 20 years. With the most common type of Charitable Remainder Trust, the balance of the trust property (the ‘remainder interest’) is transferred to a specified charity or charities at the end of the term. Charitable Remainder Trusts reduce estate taxes because you are transferring ownership to the trust of assets that otherwise would be counted for estate tax purposes.

 

Private Foundation

A private foundation can provide a tremendous opportunity for donors to educate family members as to the donors’ philanthropic goals. It may also provide younger family members with a sense of responsibility and stewardship of family wealth.  The private foundation may be structured to limit the scope of its charitable activities. It can do this through defining the permissible donees for charitable distributions, for example. Alternatively, it may be structured to allow for unlimited charitable activities.  A private foundation may employ family members (subject to limitations as to reasonable compensation) to coordinate the foundation’s activities for generations to come.