Working with Philanthropies has been a highlight of my entire career. Starting with Jim Olson in 1983, the professionals and staff have been wonderful friends and colleagues. They always come through on technical questions, research, and assistance with drafting and implementing – no matter how challenging or complex the case may be. It’s exhilarating to see good tax laws facilitate and enhance both the business deal and the greater good.
Recently I very much enjoyed collaborating with David Bonner on an arrangement that transforms itemized charitable contribution deductions into “above the line” deductions.
That is, the new tax law eliminates or vastly reduces your tax savings for itemized charitable contribution deductions. But, if you have the right kind of charitable remainder unitrust, you can get it to make some, or all, of the charitable contributions you were inclined to make.
This arrangement starts with a Net Income with Make-up Charitable Remainder Trust (“NIM-CRUT”). If you have or are looking to set up a NIM-CRUT, you are in luck. Unlike you, a NIM-CRUT does not pay any income taxes. And, your NIM-CRUT can pay a percentage of its income to one or more charities that you pick. The result? Your charities get the funds you want them to get and you get a much better deal than a mere itemized deduction. What’s better than getting a deduction? Using pre-tax dollars to make the desired donation.
Instead, you save taxes because you advantageously reduced your taxable income: The funds going to your charities never hit your income tax return.
McKay Johnson is a shareholder and member of Durham Jones & Pinegar’s Estate Planning section. Prior to joining Durham Jones & Pinegar, Mr. Johnson was a director and principal at Hill Johnson & Schmutz, LC in Provo, Utah. His practice focuses on advanced estate and tax planning, asset preservation, business formations and operations, charitable giving, and business succession.
McKay is also an adjunct professor at the J. Reuben Clark Law School at Brigham Young University, the coordinating chair of the Utah Valley Chapter of the National Planned Giving Council of Philanthropies, and was named in Utah Business Magazine’s “Legal Elite”.