The true cost of giving – Charitable donations in a no-estate-tax environment

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Abstract: As higher exemptions result in fewer people being subject to estate taxes, some might be concerned that this will hurt charities. Reduce the tax bite, the theory goes, and charitable giving will decline. In fact, the opposite is usually true. People who are charitably inclined generally don’t consider the cost of giving. It’s more common to determine the after-tax amount they wish their heirs to receive and leave the excess, if any, to charity. Accordingly, lower gift and estate taxes may increase interest in charitable remainder trusts (CRTs). This article looks at the details, while a sidebar discusses the flexibility that a nonqualified CRT can offer.