Personal and Family Philanthropy

As a component of estate planning, lawyers in the Trusts, Estates and Not-for-Profits group frequently counsel individuals and families on a variety of matters involving their personal philanthropy. This includes, for example, creating private foundations, supporting organizations and other charitable entities for donors and assisting in their administration, advising on the tax and legal aspects of giving different types of property to charity, drafting and advising on split-interest trusts that benefit both charity and the donor’s family, and advising clients in connection with their service on Boards of Trustees of public charities.

One common means by which an individual, family or company may show its commitment to charity is to establish a private foundation. We understand that both tax and non-tax issues may contribute to a donor’s decision to establish a foundation. For example, besides obtaining a tax deduction for, and avoiding capital gains taxes on, property given to a foundation, a donor may wish to create a foundation as a memorial to a family member, as a means to promote common family interests or to give younger family members some administrative experience. We have created private foundations in many U.S. jurisdictions in both corporate and trust form, ranging from less than one million dollars to several hundred million dollars. We also assist on an ongoing basis by preparing or reviewing foundations’ tax returns and other filings each year, advising on tax and other issues involving their charitable programs and assisting with governance issues.

With respect to split-interest trusts, we have extensive experience in drafting charitable remainder annuity trusts and unitrusts, including “net income only with make-up” unitrusts and “flip” unitrusts. We also have considerable experience in advising clients in situations where property other than publicly-traded securities is transferred to a charitable remainder trust, such as real estate, partnership interests or the stock of closely-held businesses. We have advised clients on reforming defective charitable remainder trusts, terminating trusts early and converting “net income only” unitrusts to standard unitrusts. Certain of these actions have involved court proceedings and/or negotiations with the Attorney General’s office in the state where the trust is administered.

Charitable lead trusts have become an increasingly popular vehicle for wealthy individuals who want to benefit charitable organizations on a current basis, while preserving trust corpus for the future benefit of descendants. If properly structured, these trusts can also provide the donor with significant gift, estate and generation-skipping transfer tax advantages. We have significant experience drafting charitable lead trusts and counseling individual and corporate fiduciaries on administering these trusts.

Other forms of charitable gifts with which we have assisted donors include gifts of a donor’s remainder interest in a personal residence or farm (with the donor retaining a life estate), “bargain-sale” gifts of real estate and other property, and gifts of limited partnership interests, life insurance, works of art, subchapter S stock and stock options. In helping to advise donors on these and other gifts, we have sophisticated tax-planning software programs that allow us to run tax analyses quickly and efficiently.