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Posted: August 20, 2012

It’s never too late for legacy planning

Here's something you might not have thought about

Helen Raleigh

Something really big and rare took place on Tuesday, June 5: the transit of Venus across the sun. It was one of the rarest celestial sights visible from Earth. Only seven Venus transits have been witnessed since the invention of the telescope 400 years ago. It won’t happen again until Dec. 11, 2117.

Watching the Venus transit in front of the Sun was a very humbling experience. Knowing that I won’t be able to see it again during my lifetime compels me to start thinking about two words: “time” and “legacy.”

Stephen R. Covey said, “There are certain things that are fundamental to human fulfillment. The essence of these needs is captured in the phrase 'to live, to love, to learn, to leave a legacy.”

One way to leave a legacy is through charitable giving. There are many ways to give. You don’t have to jeopardize your own quality of life. What I want to introduce to you today is something called “charitable remainder trusts."

This is how it works: You transfer assets to the trust. You can either keep or give to others to receive an annual annuity for a specific number of years or for life. At the end of the term, the reminder goes to the charity you named.

Charitable remainder trusts (CRT) are not something you only think of after you retire. You can use charitable remainder trusts as part of your retirement planning. By setting one up in your peak earning years, you can transfer assets like stocks or property with a low cost basis but high appreciated value to the trust.

By letting the CRT grow without taking income from it during the early years, it can begin making payouts to you when you retire. These payouts can include markups for any shortfalls in income you did not receive earlier.

Unlike IRAs or 401(k) plans, there are no limits on how much you can contribute. This vehicle allows taxpayers to reduce estate taxes, eliminate capital gains, claim an income tax deduction, and most importantly, benefit charities instead of the IRS. 

There are many charities out there are doing wonderful things. Albert Pike said, “What we have done for ourselves alone dies with us; what we have done for others and the world remains and is immortal."  When Venus transits in front of Sun again, we won’t be here. But the charities we supported and the good work they did could still leave on.  

Helen Raleigh, CFA is the owner and Chief Investment Officer for Red Meadow Capital, LLC, a Colorado Registered Investment Advisory Firm. She has more than10 years experience in the financial services industry ranging from pension funds to risk management. She served on the board of the Colorado Chartered Financial Analyst Society from 2009-2011 and is fluent in both English and Chinese.  In addition to helping clients to build a secure financial future, she writes an insightful monthly newsletter and frequently speaks publicly on investment and financial management related topics. She can be reached at: helen.raleigh@redmeadowadvisors.com

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