Charitable lead trusts are designed for people who would like to benefit a charity now rather than later. You may have heard about some charitable trust strategies before but decided against them because you wanted to make an immediate gift to charity.

With a charitable lead trust, your gift can have an immediate impact, and you’ll be entitled to other benefits as well. These trusts will enable you to take advantage of tax benefits and still make a significant gift.

If you are accustomed to making outright contributions to your favorite charity, or if you typically sell an investment and give all or a portion of the money to charity, you may be attracted to the special advantages of using a charitable trust.

Avoiding capital gains taxes on an appreciated asset is a very appealing benefit for investors. It is also a way for charitable organizations to receive a much larger donation because they are not required to pay tax on capital gains. Once the trust is established and the assets are transferred, the trustee can then sell the assets and reinvest the funds.

You also get an immediate charitable income tax deduction based on the “life expectancy” of your gift. With a charitable lead trust, you are giving the charity the income from the asset and not the asset itself. Your deduction will be based on the rate of return the charity can expect to receive, the duration of the trust, and the IRS tables used in the calculation. Your write-off will be limited to a portion of adjusted gross income but can be carried forward to future years.

With a charitable lead trust, the income from the reinvested assets will then go to the charity. The charity will receive distributions for the duration of the trust. You may specify a set number of years or the life of you or someone else. At the end of this period, the remaining assets are paid to you or your beneficiaries, for example.

A charitable lead trust may also help reduce family squabbles over inheritance. If you were to actually gift the asset to the charity upon your death, your heirs may feel somewhat cheated. By giving income to the charity during your lifetime and having the remaining assets paid to your beneficiaries upon your death, you may avoid much of this potential controversy.

If you are interested in increasing your gift to a charity and your tax benefits during your lifetime, a charitable lead trust may enable you to accomplish your goals.

By taking the time to plan your charitable gifts, you may be able to take advantage of some special tax benefits and make charitable giving a real win-win situation.

The use of trusts involves a complex web of tax rules and regulations. You might consider enlisting the counsel of an experienced estate planning professional and your legal and tax advisors before implementing such strategies.

Please contact Deborah Koval. She's an excert for this one.

Note: Please be advise that this is a re-post from Deborah Koval.
Financial advisors are those who are experienced and trained to help people with their financial plans and investments. That includes tax arrangements to retirement plans. The financial advisor can be paid through commission or in every transaction made.

If you’re partly convinced that you don’t need a financial advisor like Deborah Koval, think again. Put it this way: you don’t simply fix your own teeth, or diagnose what’s the problem with your eyes on your own. However, you can seek for consultations on how to fix them and maintain them so you won’t have to deal with any more problems in the future. That is the same thing with financial advisors. So you better be prepared on how to choose a good financial advisor, so that you can get started working on your finances, including, of course, your goals.

There simply too many investments to choose from, and without proper knowledge, training, and experience, how will you know which one is best for you through making decisions backed with thorough knowledge of these things? You simply can’t pull this off on your own. You need an expert. A mistake in your decision making can affect your future entirely. So leave your future in the hands of an expert. Consult the professional advice of a financial advisor.

First of all, you must work with your financial advisor. After all, it is your goals that he will be working on. So make sure your goals are clear to him. You must remember that your financial advisor is only there to give you advice, hence the name, and not make decisions for you. You must learn how to make decisions based on the advices given by your financial advisor. Do not leave everything to him.

Your hired financial advisor must be completely aware of, aside from your goals, your lifestyle and your assets. Therefore, you must hire an advisor that you trust. Consider this when you’re thinking about how to choose a good financial advisor that can successfully help you with your goals. If you don’t trust your advisor with these things, you won’t go anywhere. With all the things that you need to consider: your lifestyle, your retirement goals, your short term goals, cash flow, your every day expenses, etc, a good financial advisor can help you balance things out, especially in your investments. He can give you options that won’t lead you to your destruction- financially.

One of the reasons why you need to have a financial advisor is time- your time. When you don’t know how and what decisions to make, you may end up thinking about things for a long time and even do an extensive research just to help you make the correct decisions. That effort cannot amount to the knowledge of financial advisors that they gained for years through studies, and more knowledge gained through experience and service to other people.

These financial advisors have studied for years about business and finance. They need to be certified for them to practice their profession. They examine financial trends every day. They gather and study different funds available and other options for financial planning, budget, and retirement. They have a good grasp on these things. That’s what makes them qualified and more reliable when it comes to making decisions that concern finance and investments.

You need to have a very good grasp of the industry, or else you’ll end up in unfortunate situations such as selling too early or too late, settling with the wrong insurance, feeling uneasy with your decisions, etc. You must understand that things change rapidly in the financial world. Instead of doing these things by yourself, you can hire a financial advisor who can make things clear to you. Instead of doing all these things on your own, start thinking on how to choose a good financial advisor, so that you’ll save yourself from all the efforts and the biggest probabilities of making the wrong decisions.

Again, you need to look for a financial advisor that you can trust. It is important that you have confidence in your financial advisor. A good financial advisor will never give advices that are unstudied. You and your family’s future depends on how well you and your financial advisor work together to achieve all your financial goals.

NOTE: This is a re-published content from Deborah Koval.

In April, the International Monetary Fund (IMF) forecasted global economic growth of 3.5% for 2012, noting that the U.S. economy had gradually gained momentum, whereas China and other emerging economies appeared to be headed for gradual slowdowns. However, the IMF also warned that if the debt crisis in Europe deteriorated into a worldwide financial crisis, the fallout could produce a 2% drop-off in global growth over two years.1

More recent economic data released in May suggests that growth slowed more than expected in a number of the world’s major economies, primarily because problems in Europe have recently re-emerged.

There are significant differences in the economic challenges facing government leaders in Europe, Asia, and the United States, yet expanded world trade and globalization in general have made the fates of many nations more interdependent.

All Eyes on Europe

In mid-May, Greek political parties were unable to form a coalition government, and a caretaker government was named until new elections take place in mid-June. The outcome is likely to determine whether Greece will abide by the deal reached to restructure its debt under conditions set by the European Union (EU), the International Monetary Fund, and the European Central Bank. Voter anger over austerity measures and resulting political instability have reignited uncertainty about whether Greece will stay in the eurozone.2

Eurozone unemployment has risen to record highs (10.9%), and strict austerity programs in a number of European nations have held back growth more than expected. Europe barely avoided a recession during the first quarter of 2012, but 11 individual nations in the EU are judged to be in a recession.3


Economic data measuring trade, investment, spending, and output for April was surprisingly weak, prompting government action to help promote lending and speed up economic growth. The People’s Bank of China lowered the share of deposits that banks must hold in reserve (the required reserve ratio) by 0.5%.4

Until recently, Chinese leaders seem to have been more concerned about fighting inflation. However, China’s economic growth slowed from 8.9% to 8.1% in the first quarter — the slowest pace in nearly three years — when an uptick was expected.5–6 Reduced European demand for Chinese goods has been cited as a reason for the slowdown; the eurozone is the largest market for Chinese exports.7

When balancing growth and inflation, China’s authoritarian government may be able to act more decisively than democratic societies. Elected leaders often negotiate or justify policy moves and contend with public backlash. But Chinese leaders grapple with many of the same risks as other nations in the global marketplace.


The inflation rate in India (9% for most of 2011) is still the highest among the emerging-market nations known as BRICS (Brazil, Russia, India, China, and South Africa). Inflation has been cooling, but prices rose faster than predicted (7.23%) in April.8

Efforts to lower inflation, along with fewer exports to Europe, caused economic expansion to sag to a three-year low of 6.1% in the December quarter. In response, India’s central bank cut interest rates for the first time since 2009.9

Fiscal deficits and political gridlock have also put India’s investment-grade status at risk. Standard & Poor’s recently lowered the country’s credit outlook from “stable” to “negative.”10

Will U.S. Fortunes Follow?

So far, the trouble in Europe has affected Asia more than the United States. Exports account for less than 15% of the U.S. economy, compared with 30% for China.11

Still, if conditions in Europe worsen, the situation could continue to affect trade and growth around the world. Therefore, U.S. consumer and investor confidence is likely to depend on how the situation in Europe ultimately unfolds.

Investing internationally carries additional risks such as differences in financial reporting, currency exchange risk, as well as economic and political risk unique to a specific country. This may result in greater investment price volatility. All investments are subject to market fluctuation, risk, and loss of principal. When sold, investments may be worth more or less than their original cost. Investments seeking to achieve higher yields also involve a higher degree of risk.

As long as you’re earning money, you can open up an individual retirement account (IRA). An IRA is a retirement savings plan that you can open as soon as you’re earning taxable income. Examples of taxable earning are salaries, wages, separate maintenance payments, and bonuses. Aside from the criterion, you should also be below 70 years old to start an account.

Roth Vs Traditional IRAs

Roth IRA is a good choice if you’ll have high income in the future when you need to withdraw the funds. The contributions of Roth IRA are not tax deductible. However, when you withdraw them, they are tax-free.

On the other hand, traditional IRA is best for those who need to have their contributions that they make now deducted. They do not need to worry about paying their taxes in the future because their income will be lesser.

For a year, the contribution limit for both Roth and traditional IRAs is $5,000 per year. However, if you’re 50 years old up, you can contribute as much as $6,000 every year.

You have three choices when you want to open an IR: a bank, a brokerage firm, or a mutual fund company. You certainly don’t need a huge amount of money to open an IRA. Some start off with $25 to $100. There are banks that allow you to invest in stocks. Mutual funds, however, commonly require a $1,000 investment or more. The brokerage firm is for investors who have experience who wish to invest in bonds, stocks, or mutual funds.

Withdrawal rules for Traditional IRA

There is the 59 ½ rule. This rule states that you must wait until you turn 59 ½ years old for you to withdraw. If you don’t, you’ll face a 10 % tax penalty addition.

The other rule is called MDR rules (Minimum Distribution) that start when you turn 70 ½ years old. You should be able to calculate the amount of money to withdraw each year using an expectancy table, making sure that the remaining balance is zero in your IRA account when you finally reach the expectancy age.

Withdrawal Rules For Roth IRA

To make a qualified distribution, you need to be 59 ½. If you become disabled, you are qualified to make a withdrawal. You can also plan to utilize the money as a home buyer.

A traditional IRA is best for those who work in a company that does not offer retirement plans. A lot of people have lower tax brackets when they reach retirement compared to the time when they were still employed. It is very important to have different sources of retirement savings because it is difficult to foretell tax rate changes in the future.

An IRA makes you prepared for the future. You need to save your money while you are still capable to earn. It is one aspect of financial planning that you need to have, and it is best if you have a good financial advisor to help you with it.

Check out Deborah Koval. She’s an expert on this subject.