Charitable Planning
Giving More. Giving Smarter. Giving as Part of a Plan.
For many of our clients, charitable giving is not a tax strategy — it is a reflection of values. The desire to support a church, a community organization, a university, or a cause that has mattered throughout a lifetime is deeply personal. Our role is to ensure your giving maximizes its impact and integrates cleanly with the rest of the estate plan.
Charitable planning at WCSS almost always arises within a broader estate or business planning engagement — typically when a client has a highly appreciated asset, a large retirement account, or a tax situation in which charitable tools can accomplish both giving and planning goals simultaneously. When those conversations happen, we bring the legal structure to make them work.
Call us at (501) 975-6266 or Contact Us to schedule a consultation.
When Charitable Planning Makes Sense
Charitable planning tools are most valuable when one or more of the following is true:
You have a highly appreciated asset you want to sell.
Outright sale triggers capital gains tax on the full appreciation. A charitable remainder trust or donor advised fund can allow you to contribute the asset before the sale, avoid or defer the capital gains, receive a charitable deduction, and direct the proceeds to causes you care about — while potentially generating income for yourself or your family in the process.
You have a large IRA or retirement account.
Retirement accounts are among the most tax-inefficient assets to pass to non-spouse heirs. Qualified charitable distributions and beneficiary designation strategies can direct retirement assets to charity in a way that satisfies your charitable intent, avoids income tax on distributions, and frees up other assets to pass to family members in a more tax-efficient form.
Your estate has a charitable dimension you want to formalize.
Some clients have given informally for years and want to establish a more structured giving vehicle — a donor advised fund or, in some cases, a private foundation — that allows giving to continue across generations with appropriate governance and oversight.
Your estate plan creates a tax opportunity that charitable tools can address.
When the overall estate plan involves significant appreciated assets, a taxable estate, or complex business interests, charitable planning tools can reduce tax costs while fulfilling genuine giving intentions. These are not primarily tax strategies — but when charitable intent already exists, the tax dimension is worth addressing deliberately.
Charitable Planning Tools We Use
Charitable Remainder Trusts (CRTs)
A charitable remainder trust is an irrevocable trust that pays an income stream — either a fixed amount or a percentage of trust assets — to the donor or other named beneficiaries for a period of years or for life. At the end of the trust term, the remaining assets pass to the designated charity or charities. The donor receives a charitable deduction at the time of funding based on the present value of the remainder interest.
CRTs are particularly effective for clients who own highly appreciated assets — real estate, farm land, business interests, concentrated stock positions — and want to convert those assets into an income stream without triggering immediate capital gains tax on the full appreciation. The trust sells the asset, reinvests the proceeds without paying capital gains, and distributes income to the beneficiary over time.
Donor Advised Funds (DAFs)
A donor advised fund is a charitable giving account established at a sponsoring organization — such as the Arkansas Community Foundation — that allows a donor to make a tax-deductible contribution, receive an immediate charitable deduction, and recommend grants to qualified charities over time. The contribution is irrevocable, but the donor retains advisory privileges over how and when the funds are granted.
DAFs are one of the most flexible and administratively simple charitable planning vehicles available. They are particularly useful for clients who want to make a large contribution in a high-income year — to maximize the deduction — while distributing the funds to specific charities over a longer period. They can also receive contributions of appreciated property, avoiding capital gains on the contributed asset.
We work with the Arkansas Community Foundation to structure donor advised fund arrangements for clients whose charitable giving has an Arkansas community focus, and with other sponsoring organizations when the client’s giving objectives call for a different platform.
Qualified Charitable Distributions (QCDs)
For clients who are age 70½ or older and own traditional IRAs, a qualified charitable distribution allows a direct transfer from the IRA to a qualified charity — up to the annual limit — that counts toward the required minimum distribution but is excluded from taxable income. For clients who do not need their RMDs for living expenses and have charitable intentions, QCDs are one of the most tax-efficient giving strategies available. The gift comes from pre-tax dollars, reduces the taxable IRA balance, and satisfies the RMD obligation without the distribution appearing as taxable income.
Private Foundations
For families with significant charitable intentions and the desire to establish a lasting giving legacy — including multigenerational involvement in grantmaking — a private foundation may be appropriate. A private foundation is a tax exempt entity funded by the family, governed by a board, and required to distribute a minimum percentage of its assets annually to charitable causes. It provides maximum control over grantmaking and can be a vehicle for family engagement in philanthropy across generations.
Private foundations carry meaningful administrative and compliance obligations, including annual tax filings, mandatory distribution requirements, and self-dealing restrictions. We assist clients in evaluating whether a foundation is the right vehicle given their giving goals and resources, and help establish the legal structure when it is.
Integrating Charitable Planning with Your Estate Plan
The most effective charitable planning is not designed in isolation — it is built into the estate plan from the outset, coordinated with the overall asset picture, and reviewed alongside the rest of the plan as circumstances change.
A donor advised fund contribution in a high-income year, a CRT funded with appreciated farm land, a QCD strategy for a client with a large IRA — each of these is most effective when it fits into a broader plan rather than being implemented as a standalone transaction. We bring the legal structure; we work closely with your financial advisor and CPA to make sure the charitable element works in concert with the rest of what you have built.
If you have charitable intentions and want to understand whether the tools are available to make your giving more efficient, that conversation fits naturally within an estate planning engagement. We welcome the opportunity to explore it.
Frequently Asked Questions
Is charitable planning only for very wealthy clients?
No — but the tools are most impactful for clients with appreciated assets, large retirement accounts, or meaningful taxable estates. A client with a highly appreciated farm parcel, a concentrated stock position, or a significant IRA balance may benefit substantially from charitable planning tools even if their overall estate is not large by traditional measures. The question is not how much you have — it is whether your giving intentions and your asset picture create an opportunity for a more efficient approach.
What is the difference between a donor advised fund and a private foundation?
A donor advised fund is simpler, less expensive, and requires no ongoing governance by the donor — the sponsoring organization handles administration, tax filings, and compliance. The donor makes recommendations on grantmaking but has no legal control. A private foundation is fully controlled by the donor family, provides maximum
flexibility and visibility, and can reflect the family’s values and priorities in grantmaking — but it carries significant administrative and compliance obligations. For most clients, a donor advised fund is the right starting point. A private foundation makes sense when the scale of giving and the desire for family governance justify the additional complexity.
Can I contribute my farm land or business interest to a charitable trust?
Yes — and for clients with highly appreciated real property or business interests, a charitable remainder trust can be one of the most effective planning tools available. Contributing the asset to the trust before sale avoids immediate capital gains recognition on the full appreciation, generates a charitable deduction, and allows the trust to reinvest the full proceeds to generate an income stream. The specifics depends on the asset, the client’s income needs, and the intended charitable beneficiaries. This is a conversation best had as part of a broader estate and business planning engagement.
What is a qualified charitable distribution and who can use it?
A QCD is available to IRA owners who are age 70½ or older. It allows a direct transfer from a traditional IRA to a qualified public charity — up to the annual statutory limit — that is excluded from taxable income and counts toward the required minimum distribution. It is not available for distributions to donor advised funds or private foundations. For clients who have charitable intentions and do not need their RMDs for living expenses, a QCD is often the most tax-efficient giving strategy available.
How does charitable planning fit into my overall estate plan?
For most of our clients, it fits as one dimension of a broader plan rather than as a standalone objective. When a client has charitable intentions and an asset picture that creates a planning opportunity — appreciated property, a large IRA, a taxable estate — charitable tools can be layered into the plan to accomplish giving goals and planning goals simultaneously. We explore that dimension as part of every comprehensive estate planning engagement where it is relevant.
Schedule a Consultation
If you have charitable intentions and want to understand whether your giving can be made more effective — and more tax-efficient — that conversation fits naturally within an estate planning engagement. We work with Arkansas families and their financial advisors and CPAs to make charitable planning a meaningful part of a comprehensive plan.
Call (501) 975-6266 or Contact Us to schedule a consultation.