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Whenever a donor commits to a large gift, whether cash, donation of property, a Charitable Annuity or any other gift of present value, the use of a Wealth Replacement Trust should be discussed.

The cash from the tax deduction available to the donor could replace the value of the charitable gift that might otherwise have gone to the donors heirs.

Example:

Family assets are $18,000,000; husband and wife are 55 + 50, respectively. They have 4 children, 2 daughters-in-law and 3 grandchildren. If they make a gift of $1,000,000 to their college it means a loss of $550,000 for the family (the net after estate and inheritance taxes.) The $400,000 in tax credits from the $1,000,000 gift can fund a Wealth Replacement Trust that will give the heirs over $3,000,000 net after taxes.

Thus the charity receives $1,000,000 today and heirs will get almost $2,400,000 more upon parent’s death. A win-win solution.