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Smart Giving: A Simple Guide to Charitable Planning Strategies Thumbnail

Smart Giving: A Simple Guide to Charitable Planning Strategies

Estate Planning Tax Planning

Giving to charity is a deeply personal decision—whether it's driven by compassion, legacy, faith, or community. But did you know there are smart ways to give that can also provide significant financial benefits?

If you’ve ever wondered how to maximize the impact of your charitable donations while also enjoying the tax benefits of doing so, this blog post might be helpful to you.  In this article, I will break down seven effective charitable planning strategies in plain English, so you can feel more confident discussing this topic with your estate planning attorney.

1. Annual Giving:  The Classic Starting Point

Annual giving is as straightforward as it sounds: donating cash or assets to qualified charities each year. But here’s where the strategy kicks in.

  • Cash donations are deductible up to 60% of your adjusted gross income (AGI).
  • Donating appreciated assets (like stocks or real estate that have gone up in value) is deductible up to 30% of your AGI.
  • If your donation exceeds those limits, you can carry forward the extra deductions for up to five years.

A Tip on Timing:

Since the standard deduction increased significantly under the 2017 tax law (and may decrease again in 2026), many people “bunch” charitable gifts—combining a few years' worth of giving into a single year—to itemize and get a bigger tax break.

2. Qualified Charitable Distributions (QCDs):  Tax-Savvy Giving from Your IRA

If you’re 70½ or older, QCDs are a powerful tool. You can transfer up to $108,000 (2025 limit, adjusted for inflation) directly from your IRA to a charity—and it counts toward your required minimum distribution (RMD) but doesn’t get taxed as income.

Here’s why that’s huge:

  • You lower your taxable income.
  • You still fulfill your RMD obligations.
  • You support causes you care about.

Just remember: QCDs can't go to donor-advised funds or private foundations, and there’s no charitable deduction since the money isn’t counted as income in the first place.

Bonus: You can also make a one-time $54,000 QCD to certain gift annuities or charitable remainder trusts, but it must be done in one year, and only you and your spouse can receive income from it.

3. Charitable Gift Annuities:  Giving While Receiving Income

This is a win-win strategy if you're charitably inclined but still want steady income. Here's how it works:

  • You donate cash, stock, or other assets to a charitable organization like a university for example.
  • The charity gives you (and possibly your spouse) a fixed income for life.
  • You get an immediate tax deduction and possibly reduce capital gains taxes if you donate appreciated assets.

Think of it like buying a lifetime pension from a charity—you give them a gift, and they thank you with a reliable paycheck for life.

4. Charitable Remainder Trusts (CRTs):  Income Now, Charity Later

A Charitable Remainder Trust lets you donate assets but keep an income stream for yourself (or others) during your lifetime or for a fixed amount of time, up to 20 years. After that, whatever remains in the trust goes to charity.

You’ll love CRTs if:

  • You want to sell a highly appreciated asset (like a rental property or stock) without paying a huge capital gains tax all at once.
  • You want to support a cause but also need income.
  • You like the idea of a big tax deduction up front.

There are several types of CRTs, each with its own twist:

CRAT (Charitable Remainder Annuity Trust)

  • Pays a fixed dollar amount annually.
  • No extra contributions allowed after it starts.
  • Great for predictability.

CRUT (Charitable Remainder Unitrust)

  • Pays a fixed percentage of the trust’s value each year, recalculated annually.
  • Payments go up or down based on investment performance.
  • You can add more to the trust over time.

NICRUT & NIMCRUT

  • NICRUT's adjust payments based on actual net income earned in the trust.
  • NIMCRUT's let you "make up" missed income in future years.
  • Often used when trusts hold hard-to-sell or non-income-producing assets.

Flip CRUT

•    Starts like a NICRUT, but “flips” to a standard CRUT when a triggering event occurs (like selling a property).

5. Charitable Lead Trusts (CLTs):  Charity First, Family Later

Where CRTs benefit you first and charity later, CLTs do the opposite.

With a CLT:

  • The charity gets annual payments for a set number of years first.
  • After that, whatever’s left in the trust goes to your family or other heirs.

Why is this strategy beneficial?

  • You can pass more to your heirs while potentially reducing estate taxes.
  • You still support your favorite causes.

CLTs can be structured in creative ways:

  • CLAT (Charitable Lead Annuity Trust):  Pays a fixed annual amount to charity.
  • CLUT (Charitable Lead Unitrust):  Pays a percentage of the trust’s assets each year.
  • Zeroed-Out CLATs:  Designed to eliminate estate taxes entirely.
  • Step or Shark-Fin CLATs:  Start with low payments to charity that increase over time, allowing assets to grow faster.

6. Donor-Advised Funds (DAFs): Flexible, Low-Maintenance Giving

A Donor-Advised Fund is like a charitable investment account.

  • You donate cash or appreciated assets to the fund.
  • You get a tax deduction in the year of the donation.
  • The money grows tax-free and can be distributed to charities over time.

There’s no required annual payout, and you retain advisory privileges—meaning you recommend where and when the money goes. DAFs are perfect if you want to:

  • Time your tax deduction but decide later which charities to support.
  • Teach your children about philanthropy.
  • Avoid the administrative hassle of running your own foundation.

7. Family Foundations:  A Legacy That Lives On

If your family is serious about philanthropy and wants control over how money is used for generations, a private foundation may be the answer.

  • The foundation gets funded by your family’s assets.
  • You (and your family) control the board, investment strategies, and who receives grants.
  • Can operate programs, fund public charities, or provide direct aid.

There are two types:

  • Operating foundations run their own programs.
  •  Non-operating foundations give grants to others.

Private foundations must distribute at least 5% of their assets each year and follow strict IRS rules—but they’re powerful tools for families committed to long-term giving.

To Summarize

There is a common misconception that Charitable planning is just for the ultra-wealthy.  Fortunately, that is not true.  Anyone who wants to give with intention, make a difference, and get the most out of the tax system legally and ethically can formulate a charitable giving strategy.

Whether you’re donating $5,000 or $5 million, the right strategy can help you support your favorite causes, reduce your tax burden, and even leave more for your loved ones.

Working with a financial planner, a tax professional, and an estate planning attorney can help you choose the best path for your goals, your assets, and your timeline.  Hopefully now, you have a clear, plain-English roadmap to start asking the right questions and make smart, impactful charitable giving choices.

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This content is developed from sources believed to be providing accurate information, and provided by Attune Financial Planning. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.