Children of Soldiers Fund

There was an interesting challenge issued earlier this year by two iconic figures who in a very real sense represent the quintessence of extraordinary wealth in the United States. Bill Gates and Warren Buffet came out and asked the wealthiest individuals in the country, especially the people who have been named by Forbes as the 400 richest Americans, to make a pledge to give half of their wealth to charities.

It should be added that Buffet has announced that he intends to gradually give away virtually all of his assets to five different charitable foundations, and he has given more than $6 billion to the Bill & Melinda Gates Foundation over the last few years alone.

There is no doubt that giving back is a satisfying feeling, and you don’t have to be Bill Gates or Warren Buffet to be able to make a difference. People who have the ability to make a significant charitable contribution can do that while gaining some benefits of their own through the creation of a charitable remainder trust.

You simply fund the trust and the charity of your choice becomes the trustee, but this charity must be on the IRS approved list for tax purposes. The charity manages the trust during your life and makes payments to you, and these can be via either a fixed annuity or percentage arrangement. To comply with IRS regulations the amount you receive annually must equal at least 5% of the worth of the trust.

Charitable remainder trusts can also provide you with tax efficiency when you are planning your estate. If you have appreciated securities, you can place them into the trust free of any capital gains taxes. You can also deduct the value of the original contribution, less your anticipated income from the trust, from your income tax over the next five years. And finally, by creating such a trust you are reducing the total value of your estate and in the process lessening your estate tax burden while doing your part to make the world a better place.

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