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FINANCIAL PLANNING
CHARITABLE GIVING STORIES AND OPPORTUNITIES
by Cade Peterson,
Financial Planning Associate
Without a doubt, seeing people come together for a good cause is a heart- warming thing. Not long ago, I was looking through some of my dad’s old win photos and articles that he had stowed away. I came across a printout that was dated 9/25/01. The reason why my dad had saved this article for so many years is because it was regarding Winalota Cash, the horse he
was aboard when he won the All American Futurity in 1995. As I was reading through this printout, I saw a rather long list of names, 63 to be exact. I’m sure many of you know the story but I’d like to retell it now.
Winalota Cash was, at the time, the #2 all-time money earner when he was placed in the 2001 Heritage Winter Mixed Sale. You’d think that after a career such as his with 19 trips to the winner’s circle, 10 graded stakes wins and nearly $2 million in earnings, he’d be wellkept and given the opportunity to enjoy the rest of his life on a peaceful ranch. Unfortunately, this wasn’t the case. He was placed in the Heritage Place Winter Mixed sale, and this rubbed several individuals the wrong way as the buzz was that the match racers from Mexico planned to buy him and continue racing him. There were 63 different owners, ranches, or entities that pooled money together to purchase Winalota Cash at the sale for the sole purpose of allowing this champion to claim his welldeserved retirement. Because of these people coming together for a good cause, Winalota Cash was able to live out the rest of his life under the care of Luke and Cindy Knox at Circle
K Farm in Arkansas. After reading this story, I decided I was going to write an article on charitable giving opportunities and how they
Cade Peterson
can benefit you and your business, and likely do some good in the world to boot. There are several strategies and opportunities that allow for charitable giving and tax deductions. More often than not, if you donate money to a non-profit, you will be able to deduct that amount from your taxable income. I have listed out a few options to consider when charitable giving is involved.
CHARITABLE REMAINDER TRUST (CRT)
This is a type of trust that allows you
to create an income stream for you and
your beneficiaries from the assets placed
in the trust, while designating a charity to receive the remainder of the assets after your beneficiaries pass on. Once a CRT is created, you can contribute cash, real estate, and publicly traded securities. This type of trust can be great for you if you’re looking for a current year income tax deduction and are in need of a reliable income stream for you or a beneficiary. Once the designated beneficiaries are deceased, the assets left in the trust
will be transferred over to the charitable organizations that you selected.
CHARITABLE LEAD TRUST (CLT)
To make things simple, think of a lead trust as the exact opposite of a remainder trust. With a CLT, a term is set for certain percentage of assets to be distributed to charitable beneficiaries. Once this term has expired, the assets remaining in the trust will be distributed to non-charitable beneficiaries, such as family members, and if set up properly, the assets will be received free of any potential estate tax.
DONOR ADVISED FUND
This is one of the fastest growing charitable giving instruments today. The way a donor advised fund works is quite simple. An irrevocable contribution is made to the fund and later, donations can be made at your discretion to any member of qualified charities for years or even decades to come. This is a great way to receive an immediate income tax deduction while also setting aside
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