Smart Philanthropy: What Your San Luis Obispo Charities Might Not Tell You

Donation to a San Luis Obispo Dog Shelter

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Smart Philanthropy: What Your San Luis Obispo Charities Might Not Tell You
… because they may not know

There are some wonderful charities in San Luis Obispo and in the county. For help finding some of the lesser-known ones, follow the link to this post: Your Guide To Finding Reputable Charities In San Luis Obispo County. Most San Luis Obispo charities are run by volunteers with few, if any, paid staff. 

All depend on donations. Some of them mention planned giving on their websites. However, only one mentions Charitable Remainder Trusts, and that is very unfortunate.

What is Planned Giving?

Planned giving, also known as legacy giving or charitable estate planning, involves a donor making arrangements for a significant gift to a charity to be distributed at a future date, typically as part of their estate plan. This type of giving is strategic and often involves larger donations that can include various assets beyond just cash. 

Types of Planned Gifts:

Bequests: Donations made through a will or trust. Donors can specify a set amount, a percentage of their estate, or the remainder of their estate after other bequests have been fulfilled.

Charitable Gift Annuities: Donors transfer assets to a charity in exchange for a fixed annual income for life. The remainder of the gift goes to the charity after the donor’s death.

Charitable Remainder Trusts (CRTs): Donors transfer assets into a trust that pays them (or other beneficiaries) income for life or a specified term. After the term ends, the remaining assets go to the designated charity.

Charitable Lead Trusts (CLTs): The charity receives income from the trust for a specified term, after which the remaining assets go to the donor’s heirs.

Life Insurance Policies: Donors can name a charity as the beneficiary of a life insurance policy, or they can transfer ownership of the policy to the charity.

Retirement Plan Assets: Donors can designate a charity as a beneficiary of their IRA, 401(k), or other retirement accounts.

Charitable Remainder Trusts

Only one organization mentions Charitable Remainder Trusts in San Luis Obispo. If you do not believe me, perform a Boolean Google search with these search terms: “San Luis Obispo” AND “charitable remainder trust”. And the prize goes to … Cal Poly!

All charitable organizations can be a named beneficiary in a Charitable Remainder Trust

You and your estate planning attorney, supported by your financial planner and tax adviser, can set this up. Many institutions, including brokerage houses such as Vanguard, Blackrock, Edward Jones, and many others, have trust departments that can run the administration for you, often at a very reasonable fee. Often lower than what local organizations may be able to offer.

What is so special about Charitable Remainder Trusts?

Here are the highlights:

  • Tax Efficiency on Asset Sales: The tax-exempt trust can sell and diversify highly appreciated assets without incurring capital gains tax. 
  • Income Provision: Provides lifetime or fixed-term income to the donor, offering financial security or supplementary income.
  • Immediate Tax Deduction: The donor receives an immediate tax deduction for the present value of the remainder interest that will eventually go to charity.
  • Charitable Contribution: After the donor’s death, the remainder of the trust goes to one or more named charities that support the donor’s philanthropic goals.
  • Estate Tax Benefits: Since the remainder interest is irrevocable and the donor cannot access or control it, it is not subject to estate tax, potentially reducing the donor’s estate tax liability.

Charitable Remainder Trusts provide donors with financial benefits and income security, while also offering substantial tax advantages and the opportunity to support charitable causes. Charities benefit from future financial support and strengthened donor relationships. These mutual benefits make CRTs an attractive option for both donors and donees.

Does everybody know about this?

Charitable remainder trusts (CRTs) are underutilized as vehicles for charitable giving. The financial mathematics behind them appears complex, and few attorneys, financial advisers, or CPAs feel entirely comfortable explaining them to their charitably inclined clients. Often, the topic is not even brought up.  This is unfortunate because charitable remainder trusts offer many benefits.

Even if the topic is brought up, many advisers don’t explain it well, and this perhaps may be the solution to the mystery that “…despite its effectiveness, the percentage of people who implement charitable planning programs remains pitifully low, despite the practically too-good-to-be-true benefits.” [PermaLink]

Our Charitable Remainder Unitrust calculators rank high on Google 

Klaus Gottlieb, Esq., Wealth Care Lawyer, understands the math behind Charitable Unitrust from the ground up. He programmed two calculators for the web, each with detailed use instructions. 

Charitable Remainder Unitrust Calculator With Monte Carlo Simulation – Suitable for clients
Charitable Remainder Trust Calculator And Illustrator – Best used with your advisor

Both calculators have been benchmarked but are not guaranteed. Wealth Care Lawyer uses widely used and trusted commercial software (Brentmark) in the office to make IRS-relevant calculations.

Why is it a great time to establish a Charitable Remainder Trust

Because the IRS 7520 rate is so high right now. See the graph (data crunched by Wealth Care Lawyer):

The IRS 7520 rate over the last 20 years/
The IRS 7520 rate over the last 20 years

All other things being equal, the higher the 7520 discount rate, the higher the tax deduction. The following graph depicts the relationship..

The influence of the IRS 7520 rate on the amount of the tax deduction.

The IRS 7520 rate reflects the current interest rate situation. When a donor puts money into the trust, they forego other opportunities (they could invest at the current discount rate, or higher, outside of the trust). This is known as opportunity cost. The IRS wants to encourage charitable giving and rewards the donor with an income tax deduction that is higher when the prevailing interest rates are higher.  If the interest rates come down again, you don’t have to give any tax savings back (no recapture).

Where to find help for establishing a Charitable Remainder Trust in San Luis Obispo

If you’re considering a Charitable Remainder Trust to support your favorite charities while enjoying significant financial benefits, now is the perfect time to act. Contact Wealth Care Lawyer for sophisticated guidance on setting up a CRT tailored to your needs. Klaus Gottlieb, Esq., works with your existing tax and financial advisors to navigate the complexities and maximize the advantages of your charitable giving. Schedule an initial appointment on our website,, or call us today to schedule a consultation. Secure your legacy and support the causes you care about most with smart philanthropy.


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