Tax-Efficient Charity Example

As a result of implementing a Charitable Remainder Trust, the Smiths created a source of guaranteed income for their retirement while dramatically reducing their current income tax liability. They established a tax-advantaged fund for their favorite charities while creating an inheritance for their children and grandchildren that will pass estate tax free. This planning fulfilled the following goals:

• Reduced federal estate taxes
• Funded favorite charities
• Generated an income tax deduction
• Protected assets from creditors
• Diversified their assets tax-free
• Maximized tax-free compounding
• Managed the timing of taxable income

The Smiths lowered taxes by $1,341,000 while improving lifetime income and benefits for heirs. Planning costs were less than 1% of tax savings.