Emanuel J. Kallina, II

Once the revaluation occurs, Harry should consider contributing the dinars to a CRT, of which Harry and Wanda are income beneficiaries, before he sells the dinars. Gain on the sale of dinars by the CRT is not recognized for tax purposes because the CRT is a tax-exempt entity. Thus, Harry could defer the tax consequences of the sale, and pay income taxes only when he and Wanda receive payments from the CRT. Further, certain types of CRTs may provide greater opportunity to regulate the timing and flow of income to our donors and to grow assets tax-free.

Normally, charitable planners view pooled income funds as a great financial planning tool during life, and not a vehicle to transfer wealth. This case study may alter that assumption! Contributing to a PIF allows our donor to benefit charity, avoid potential capital gains taxes, transfer wealth to younger generations, and receive lifetime cash flow.

The charitable planning world is constantly changing. This speech, given on May 20th at the 2016 Charitable Planning Summit, covers Legislative updates and changes to CRTs, PIFs, CGAs, Rates, Tables, and Statistics.

In his presentation on October 15th before the Leadership Institute at the National Conference on Philanthropic Planning in Anaheim, speaker Emil Kallina discussed the mathematics behind the Real Estate Pooled Income Fund. His PowerPoint highlights benefits to the charity, as well as benefits to the donors.

Federal tax law applicable to charitable gift planning is essential knowledge for all gift planners. Advanced gift planners need timely and accurate information on technical, judicial and regulatory actions affecting their work. This speech, given on October 15th at the 2014 National Conference on Philanthropic Planning in Anaheim, covers relevant new IRS rulings, Treasury actions and regulations, and court decisions. Congressional developments will also be considered.

Experts predict a resurgence of Charitable Remainder Unitrusts because income tax rates are high and asset values are up. A similar environment existed in the 1990s, when the number of CRUTs increased dramatically. For clients selling appreciated assets, such as with the sale of a business, CRUTs are arguably the best financial planning vehicle available, and provide a wonderful source of funding for charity. The attached presentation explains the trends and analyzes the financial benefits of CRUTs for donors, heirs, and charity.

For many decades, donors have used Charitable Remainder Trusts ("CRTs") to balance their donative intent with a need for a continued income stream. Without a CRT, a donor who cannot afford to make a large gift during life would simply leave assets to charity in his Last Will and Testament. However, a CRT allows the donor to make his gift during life while retaining an income stream. In addition to the satisfaction of seeing his contemplated gift come to fruition, the CRT allows a donor to realize both income and estate tax benefits. This is particularly true if a donor holds property that could be subject to capital gains tax. The tax benefits of a CRT often allow donors to make a more generous gift than they initially thought possible!

Over time, Congress and the Internal Revenue Service ("IRS" or "Service") have shaped CRTs into the devices we use today. Some important legislative milestones include the Tax Reform Act of 1969 ("TRA 1969")[1], the Technical and Miscellaneous Revenue Act of 1988 ("TAMRA")[2], the Taxpayer Relief Act of 1997 ("TRA 1997")[3], the Tax Relief and Health Care Act of 2006 ("TRHCA"), and the Pension Protection Act of 2006 ("PPA"). Additionally, the IRS has issued numerous pronouncements affecting CRTs, including Treasury Regulations ("Regulations" or "Regs") which followed on the heels of legislation, Revenue Procedures, Private Letter Rulings ("PLRs"), and Technical Advice Memoranda ("TAMs"). This paper will explore how key events have shaped CRTs over time, leading to the charitable remainder trusts as we know them today.

In preparing this paper, the authors had the privilege of speaking with Conrad Teitell, who has been instrumental in shaping legislation and regulations governing CRTs. Conrad currently practices in the Stamford office of the law firm of Cummings & Lockwood and is a nationally recognized legal practitioner, author and lecturer in the trusts and estate field. He is the recipient of the American Law Institute/American Bar Association's Harrison Tweed Award for Special Merit in Continuing Legal Education and is an adjunct professor at the University of Miami School of Law. Listed in the Best Lawyers in America, Conrad is a Fellow of the American College of Trust and Estate Counsel, and is the author of the five-volume treatise, Philanthropy and Estate Planning.

Conrad has been active for the past 40 years in working with IRS and testifying before Congress; of particular interest to us is his testimony before the Senate Finance Committee at the TRA 1969 hearings. Conrad was a member of a small 501(c)(3) group, along with Presidents from 19 colleges and universities, who visited the White House and Congress, speaking with such leaders as Arthur Burns and Russell Long. We have the privilege of being able to incorporate Conrad's unique historical insights into this article (see designated boxes throughout) and adding some of our own.

On October 5th, Emil Kallina gave a presentation at the 2011 Partnership for Philanthropic Planning Conference on which type of tax-exempt organization is the most appropriate giving vehicle, given a donor's preferences. Many high net worth individuals use supporting organizations, private foundations, private operating foundations, and donor advised funds to fulfill their ultimate philanthropic goals and to teach their heirs the importance of family philanthropy. The presentation addressed the comparative benefits and burdens of these vehicles, the so-called "arrows in the quiver" of the charitable planner, especially in light of the Pension Protection Act and recent litigation in Federal Circuit Court. The presentation materials are attached.

This article describes how a charity can use a "Charitable Put" to reduce its risk in accepting a gift of real estate.

On May 4, 2011, Emil Kallina gave a presentation at 2011 Northern California Planned Giving Conference regarding the current developments in charitable giving. His presentation materials are attached.

Giving an income interest in a CGA to charity may yield an income tax deduction that exceeds the donor's investment in the contract.

Certain charitable pledges are enforceable by the charity.

This article was first published in Tax Management Estates, Gifts and Trusts Journal, July-August, Vol. 14, No. 5 (September 14, 1989) under the joint copyright of Emanuel J. Kallina, II and Tax Management. With Bruce E. Bigelow, then Director of Planned Giving at Gettysburg College, the authors developed the concept of the Real Estate Pooled Income Fund ("REPIF") as a method of using charitable giving techniques for capital financing.

This article was first published in Tax Management Estates, Gifts and Trusts Journal, July-August, Vol. 14, No. 4 (July 13, 1989) under the joint copyright of Emanuel J. Kallina, II and Tax Management. With Bruce E. Bigelow, then Director of Planned Giving at Gettysburg College, the authors developed the concept of the Real Estate Pooled Income Fund ("REPIF") as a method of using charitable giving techniques for capital financing.

Gifts to some charitable vehicles such as a CRT, CGA, PIF, or retained life estate may be subject to gift taxes and may require restructuring as a result of Section 2511(c), which was enacted as part of EGTRRA. This provision is only a concern for 2010, or for any year during which there is no estate tax.

On May 16, 2008, Emil Kallina gave a presentation at 2008 Advanced Estate Planning Institute regarding the current developments in charitable giving. His presentation materials are attached.

Here is a summary of the most important developments:

• Congress - legislative changes, past, present and future, in particular what the Senate Finance Committee, House Ways & Means, and Joint Committee have on their agenda; the future of "extenders" and estate tax repeal or modification; IRA rollovers to charity and charitable vehicles.

• Charitable Vehicles - charitable remainder trusts, charitable lead trusts, gift annuities, pooled income funds, life estates, supporting organizations, donor advised funds, and private foundations.

• Charitable Planning Techniques - how to use charitable gift vehicles to limit income, estate, gift, and generation skipping taxes, including early terminations, gifts of a partial interest in a CRT, the "Harvard" CRT rulings regarding UBIT, reformations, disclaimers and rescissions; IRA loans to charity; and the "charitable put".

• Tax Exempt World - including IRS Business Plan, changes to governance and best practices, the Panel on the Non-Profit Sector, Form 990, IRS audits, and the determination letter process (or lack thereof).

• Substantiation & Tax Return Preparer Penalties - substantiating charitable gifts, the "more likely than not" standard for tax advice; liability of all advisers with respect to all tax returns, where advice is given regarding tax returns.

In this article, derived from his speech to the Planned Giving Round Table at THE ASSOCIATED on March 7, 2007, Mr. Kallina addresses what to do with the family home as parents begin to age. The subject matter briefly covers (1) Qualified Personal Residence Trusts; (2) the use of revocable trusts; (3) gifting remainder interests to charity and retaining a life estate; (4) the basics of reverse mortgages; and (5) the problems of real estate in probate.