Cedar Brook's Partner, Michael Primerano, is featured in Crain's on How to maximize the value of your charitable gifts

People give for many reasons. Some choose to give anonymously while others appreciate being recognized by a charity or cause. Some opt to give cash while others donate cloths, furniture, or food items. While there is no right way to give, there certainly are ways to maximize the value of a gift – both from the charity’s perspective as well as the donor’s.

Here are popular techniques that donors use to facilitate their charitable objectives:

Charitable remainder trusts

If your objective is to make a large gift now while receiving income from the donated assets during your lifetime, a charitable remainder trust may be appropriate. The income is free of immediate capital gains tax, which in turn leaves more capital to generate income.

Charitable lead trusts

If your objective is to generate income to a charity during your lifetime, leaving the remainder interest to a named beneficiary of your choice, a well-drafted charitable lead trust is an efficient tool to accomplish this objective. This structure often gives the donor an annual gift tax deductions but generally no income tax deduction.

Wealth replacement trusts

If your objective is to make a large gift now while receiving income from the donated assets during your lifetime, and you wish to replace the wealth donated to the charity for the benefit of your heirs, a wealth replacement trust is an efficient means to do so.

A wealth replacement trust uses income generated by a charitable remainder trust to fund life insurance owned by an irrevocable insurance trust. This technique is designed to replace the wealth given to a charity. In some cases, heirs are left with more wealth on a net basis because the insurance proceeds owned by the irrevocable insurance trust are not subject to estate taxation.

Alternative strategies

Other gifting strategies include charitable foundations, donor advised funds, pooled income funds, and charitable gift annuities. While some of the alternative strategies can help keep things simple, keep in mind that charitable trust planning can often offer more flexibility. Seek the advice of a qualified professional before implementing a charitable planning strategy.

In giving, as is in life, it is important to be thorough, thoughtful, and well intentioned. In the words of Antonio Porchia, an Italian poet, “I know what I have given you… I do not know what you have received.”

About Cedar Brook Financial Partners

Headquartered in Cleveland, OH, with offices in West Bloomfield, MI, Naples, FL, and Clearwater, FL, Cedar Brook is one of the largest independent wealth management firms in the country, according to Crain’s Cleveland Business 2012. Cedar Brook’s now seventy-plus professionals deliver customized, personal services including comprehensive wealth strategies, investment and insurance advice, retirement plan consulting, and group benefit programs to physicians, corporate executives, privately held business owners, and families. Cedar Brook has been recognized again, as a Top Workplace in Northeast Ohio by WorkplaceDynamics according to the Plain Dealer's 2013 study. The firm offers securities through Securities America Inc., member FINRA/SIPC. Advisory services are offered through Securities America Advisors Inc., an SEC Registered Investment Advisor. Cedar Brook Financial Partners LLC and the Securities America companies are not affiliated. Securities America and its representatives do not provide tax or legal advice. For more information, please visit www.cedarbrookfinancial.com.

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