Professional Advisors: Client Scenarios

Giving opportunities often coincide with major business or financial decisions. Recognizing -- and seizing -- those opportunities can save your client money.

Following are just a few such scenarios. We realize that each of your clients -- whether an individual, family, or business -- has a unique set of circumstances. Give us a call and let us help you find the best charitable vehicle for your client.

Year-End Tax Planning and Deductions
Retirement Planning
Appreciated Stock or Real Estate
Considering a Private Foundation

Year-End Tax Planning

Scenario: A Minneapolis executive just earned a large year-end bonus and would like to donate it to charity, but wants to postpone specific charitable decisions.

Solution: Receive an immediate tax deduction by establishing a Donor Advised Fund. The next year, the donor recommends grants to nonprofits that help preserve the environment. He continues to contribute year-end bonuses to the fund, making grants when it is convenient and has the greatest impact for the charities.

A Comfortable Retirement

Scenario: A St. Paul retiree wants to continue to give to the community in areas of the arts and education, without running out of money during her lifetime.

Solution: Establish a Charitable Remainder Trust that provides an income stream during the beneficiary's lifetime and names a Designated Fund as the trust's remainder beneficiary. The trust will provide a steady income stream to the donor, with the security of knowing that professional investment advisors manage the trust funds. The fund will achieve the client's charitable objectives far into the future.

Appreciated Stock and Real Estate

Scenario: An affluent family in Minneapolis has appreciated stock and real estate that constitute substantial wealth and also contribute to estate planning problems for them this year. The parents have a real interest in affordable housing and would like to take an active role in supporting their community. They also would like to get their adult children involved in philanthropy.

Solution: Create a Supporting Organization (minimum $5 million) or Donor Advised Fund (minimum $10,000) at the Foundation. The family contributes their appreciated stock and real estate for the maximum allowable charitable tax deduction and avoids capital gains taxes. When the Foundation sells the assets, the entire gift is put to work. The Foundation's staff will work closely with the family to achieve their philanthropic goals.

Private Foundation

Scenario: A Bloomington family would like to broaden their philanthropic impact through a private foundation, but want greater tax benefits and fewer bureaucratic hurdles.

Solution: Open a Donor Advised Fund. The fund makes grants throughout the country. For a side-by-side comparison of the advantages of a Donor Advised Fund, see the attached chart. The family meets regularly to make grant decisions. Because many of them are real estate professionals, many of their grants focus on the housing needs of low-income communities. Their privacy is maintained, and they don't need to worry about tax returns, minimum payouts, or excise tax.