For appreciated assets that are held privately Greece Email List, the valuation will be limited to cost basis. MICHAEL: Vonny, are there situations where donors might want to choose to use both a private foundation and a donor-advised fund? VONNY: Yes, there are different scenarios where a combination of the vehicles can help a donor reach their philanthropic goals. One example is a multi-generational family, where the newer generations are keen to exercise their philanthropy, at least in part outside of the mission of the private foundation. MICHAEL: So, Julia, let me come Greece Email List back to you. We’ve been talking about endowment vehicles, but there are other types, including income-producing vehicles. What should donors be thinking about in that category? JULIA: Well, Greece Email List the first of these types of income-producing vehicles that donors may want to consider is a charitable remainder trust.
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Charitable remainder trusts are irrevocable trusts from which Greece Email List there are taxable payouts for life or some term up to 20 years to a non-charitable beneficiary, such as the donor or a family member of the donor, after which one or more charities would receive whatever is left, also known as the remainder. Like outright gifts to charity or a donor-advised Greece Email List fund, if a CRT is funded with cash, the donor can claim a charitable deduction of up to 60% of adjusted gross income. If appreciated assets are used to fund the trust, up to 30% of their AGI may be deducted in the current tax year. As Vonny just mentioned, if the donor cannot use the whole deduction in the year of the gift, he or she can carry over the deduction for up to five additional years Greece Email List. The upfront deduction for funding a CRT, though, is not typically the primary driver like it would be for a foundation or donor-advised fund.
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Typically, a CRT is appealing to a donor for its deferral of Greece Email List tax, which is paid overtime on the distributions versus all at once if the contributed assets were sold. This is why CRTs are such a popular vehicle for donors that have low basis appreciated stock positions or other non-cash. When donors are considering giving vehicles such as private foundations, Greece Email List donor-advised funds and charitable remainder trusts, this is not an either/or situation. There are instances, for sure, where a combination would be the best way to meet charitable goals. MICHAEL: And, Vonny, to that point, are there additional points about charitable remainder trusts or Greece Email List other income-producing vehicles that we should be considering here? VONNY: Absolutely, Michael.