October 27, 2021

Volume XI, Number 300

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October 26, 2021

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October 25, 2021

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Charitable Giving

For the charitably inclined, transferring assets during life or at death to a public charity, private foundation and donor-advised fund is an excellent strategy to give back in a tax efficient way. Charitable giving remains a key consideration in a client’s overall estate plan, as distributions from a trust or directly to a tax-exempt nonprofit organization will not cause a capital gain recognition event under current law or proposed legislation.

However, the proposed legislation presents a potential dilution of the current benefits that exist for creating a
split-interest charitable trust (e.g., a charitable lead trust or charitable remainder trust). While the charity’s share of any taxable gain would not cause a recognition event, appreciated assets attributable to a non-charity beneficiary would generate capital gains tax as to its share of the value transferred. While the proposed legislation does not affect the tax-exempt status of such trusts, their utility could be greatly diminished. As a result, clients with charitable intentions should consider creating such trusts now in order to lock in their optimal benefit.

© 1998-2021 Wiggin and Dana LLPNational Law Review, Volume XI, Number 237
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From business-succession planning to philanthropic arrangements to trust and estate issues, we provide sophisticated counsel that helps families and individuals with substantial assets maximize their wealth for themselves and future generations. In addition, we pay particular attention to each client’s unique family situation to...

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