Family Stewards: Don’t Overlook These Charitable Giving Tools


With the new, much higher standard deduction that went into effect with the Tax Cuts and Jobs Act (TCJA) of 2017, some feared the demise of charitable giving. After all, the standard deduction (in 2021, $12,550 for single taxpayers and $25,100 for married couples filing jointly) is, in many cases, much greater than the sum of all personal deductions available to most taxpayers, even with charitable deductions included.

But for many high-net-worth families, and especially for the family stewards who provide leadership and guidance in establishing important philanthropic legacies, charitable giving remains a vital priority. Fortunately, there are still strategies available that can provide both meaningful support for important causes and tax benefits for the individuals and families who support them.

  1. Pooling multiple gifts in the same year with a donor-advised fund (DAF). Some benefactors may wish to provide a large, one-time gift that consists of several years’ worth of normal payments. Depending on the size of the gift, the donor may wish to spread the benefit over several years, and this can be accomplished by the use of a DAF. The DAF may be sponsored by a local charitable umbrella organization such as the United Way, or it may be offered by a financial institution. The DAF holds and administers donated funds, distributing them to charities in subsequent years. While the DAF is not legally required to disburse gifts to any specific charity, most will follow a donor’s wishes as long as the receiving charity fits within the scope and focus of the DAF.
  2. Charitable lead annuity trust (CLAT). In this strategy, a grantor establishes and funds a trust that will make periodic (usually annual) payments to one or more charities designated by the trust. The charities receive the payments for a number of years specified in the trust, after which annual payments are made to non-charitable recipients (usually, family members). In the year the trust is funded, an actuarial calculation determines the tax deduction generated by the annuitized payments. Because the grantor chooses the trustee, CLATs provide a bit more control over the disposition of the gifts than with a DAF.
  3. An “almost-charitable” LLC. This approach was recently popularized by mega-wealthy donors like Facebook’s Mark Zuckerberg and his wife, Dr. Priscilla Chan; Laurene Powell Jobs, widow of Steve Jobs; and Pierre Omidyar, founder of eBay. The concept is to form a limited liability company (LLC) and fund it with cash or other assets that the donor ultimately intends to give to charitable causes. There is no immediate tax benefit, but the donor retains complete control of the assets until the LLC makes the donation, at which time the deduction for the gift passes through to the donor. This can be an effective means of segregating assets earmarked for future gifts and still retaining control until the time for the gift has arrived.

As a fiduciary financial advisor, I specialize in providing authoritative, research-tested guidance—always delivered with the client’s best interest placed ahead of everything else—to family stewards and others who seek to establish their financial legacy. To learn more, click here to read my whitepaper for family stewards.

Stay Diversified, Stay YOUR Course!