Retirement Income Toolbox

January 15, 2017

Retirement Income Toolbox


Now the holiday season has passed and most people are settling back into their somewhat normal schedule, most will begin the task of preparing for tax season.  In this month’s article I will share some possible tips that may be useful to those   who are interested in or already participating with Charitable donations and how they might help your tax status.

Many people are actively involved in charitable donations and are setting the stage for how their children and grandchildren may or may not be involved with it.  Below are some suggestions that Robert Karon highlights in his Oct 31, 2016 article from

  1. Amounts that go to charity are excluded from your taxable estate.

Amounts given or left to your spouse are not subject to transfer taxes.  Amounts donated to charity are tax-deductible from your taxable income up to 50% of adjusted gross income when you give to qualified charities.

  1. Make as much in lifetime charitable donations as possible every year to get the maximum income tax savings.

The double benefit of making lifetime charitable donations is that it reduces your current income tax bill and if you plan to leave the remainder of your estate to charity, you can give more to charity with the extra income saved in taxes.

  1. Allow our beneficiaries to disclaim in favor of a charitable vehicle.


Have provisions in your estate documents that allow each child separately to disclaim all or part of his or her inheritance in favor of charity.  There is no estate tax on the disclaimed portion that goes to charity, and disclaimed sums can go to a variety of charitable vehicles.


  1. Establish a charitable lead trust.

During life, the charitable lead trust must give a certain amount to charity each year for the specified period of time you chose with the remainder going to your children.  If you make it a maximum zeroed-out charitable lead trust, there are no estate or gift taxes on the remainder the child or children gets.


  1. Utilize a charitable remainder trust.

Put very low-tax basis assets into a charitable remainder trust and sell them to defer the tax.  This will also provide for more diversification and additional income.  Design the charitable remainder trust for the maximum income you are allowed, if you want, or no income.  Charities in the end must get a minimum of the present value of about 10% of the charitable remainder trust value.  You get an upfront charitable income tax deduction in the year the charitable remainder trust is set up.

  1. Annual charitable deduction donations and bequests at your passing can be made in a variety of ways using a variety of vehicles, such as a private family foundation, a donor-advised fund, a charity of your choice and others.

Charitable vehicles can build and teach family values that can be passed through generations and make a statement about current donors.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor