Wise Ways to Transfer Wealth

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“He who gives while he lives also knows where it goes” -Percy Ross

Americans are among the most generous individuals in the world. In fact in 2010, according to the Giving USA Foundation, total charitable giving grew to $291 billion. While philanthropy is as American as apple pie, many high net worth individuals want to ensure that they are optimizing the most efficient tools available for giving away their assets.


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With that in mind, I have created an informative review of ways individuals can familiarize themselves with practices for a lifetime of giving that not only benefits heirs, charities and alma-maters, but also enables donors to ensure their money is allocated appropriately.

Outright Gifts to Charity

This is often considered one of the easiest forms of charitable giving. Generally, these types of gifts offer a charitable income tax deduction of up to 50 percent of adjusted gross income, and any unused portion of the deduction can be carried forward for five years. But there are potential disadvantages to consider when making an outright gift. For example, unless otherwise specified, there is the potential for loss of control over the charity’s future use of the gift.

Designating A Charity As Beneficiary of Life Insurance

This strategy incorporates naming a particular charity or group of charities as the beneficiaries of a donor’s life insurance. This strategy is easy to execute and can also allow for more control as the donor often continues to retain the right to revoke the gift by changing the named beneficiary of the insurance.


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A Charitable Remainder Trust

This trust distributes a payout from the trust to its beneficiaries for a period of time after which the remaining assets are distributed to your charities of choice. You can determine the time frame of the trust— it can last a lifetime or for a fixed term of up to 20 years— as well as the amount of annual payouts.

Charitable Lead Trusts

Ideally, these trusts are funded with assets that are expected to appreciate over time. The charity of your choice receives a fixed annual payout from the trust, and the remainder goes to your family members or other beneficiaries of the trust at the end of the charity’s payout term. Unlike charitable remainder trusts, generally speaking, charitable lead trusts do not provide for an income tax deduction.

Charitable Gift Annuity

This annuity is among the oldest and most simple methods of making a charitable gift, which also provides for a cash flow to the donor or another party designated by the donor. The Charitable Gift Annuity is a method of making a charitable gift while retaining a cash flow for yourself or others. It’s an agreement between a donor and a charity, whereby the charity, in return for a gift, agrees to pay a fixed sum of money for a period of time that is typically measured by the donor’s age.

Donor Advised Fund

This fund is another simple technique for making a charitable contribution while continuing to make grant or spending recommendations for these funds in the future. Typically, these funds are considered easy to establish, low cost and flexible methods for charitable giving. These funds are often used instead of a private foundation because they are simpler and offer potential tax advantages.


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Private Foundation

A private foundation is a legal entity set up by an individual, family or group of individuals for the purpose of philanthropy; management and grant-making are supervised by its own trustees or directors.

Adam Carlin

Adam E. Carlin in a managing director wealth management financial advisor. and senior portfolio management director at Morgan Stanley Smith Barney located in Coral Gables FL.

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