USA Law and Practice Contributed by: Christopher Boyett, David Scott Sloan, Max Angel and Eric Bracy, Holland & Knight LLP
Common Charitable Vehicles In estate planning, charitable giving can significantly reduce the taxable estate. Assets donated to qualified charities are excluded from the estate’s value, poten - tially lowering or eliminating federal estate tax liability. Common vehicles include charitable lead trusts (CLTs) and charitable remainder trusts (CRTs), which allow donors to support charitable causes while retaining income streams or passing assets to heirs in a tax- efficient manner. Donor-advised funds (DAFs) and pri - vate foundations also offer structured ways to manage charitable contributions over time, with varying levels 501 (c)(3) Public Charities are non-profit organisations that receive broad public support or qualify as “per se” charities, such as churches, schools and hospitals. These entities are not controlled by a single family or small group of donors. Contributions to public chari - ties are eligible for the most favourable tax treatment – up to 60% of adjusted gross income (AGI) for cash donations and 30% for non-cash assets. Public chari - ties are subject to fewer regulatory burdens and are often used in direct giving or through donor-advised funds. Private Foundations Private foundations, by contrast, are typically funded and controlled by a single family or a small group of donors. They offer greater control over grant-making and can be used to employ family members or sup - port specific causes over generations. However, they are subject to stricter IRS regulations, including annual minimum distribution requirements, self-dealing prohi - bitions, and limitations on business holdings. Deduc - tion limits are also lower – 30% of AGI for cash and 20% for non-cash contributions. Supporting Organisations of control and regulatory requirements. 10.2 Common Charitable Structures 501 (c)(3) Public Charities Supporting organisations are a unique type of 501 (c) (3) public charity that exists to support one or more other public charities, often offering a hybrid between the control of a private foundation and the favourable tax treatment of a public charity. While more complex to establish and operate, they offer distinct advan - tages. Notably, supporting organisations can hold cer -
Children born outside of marriage are recognised as descendants of their mother and, if paternity is estab - lished, of their father. Adopted children are treated as legal descendants of their adoptive parents but gener - ally not of their biological parents. Surrogacy is permitted in many states, with legal par - entage determined by the type of surrogacy and appli - cable state law. Gestational surrogacy typically allows the intended parents to be recognised as legal parents through court orders, while traditional surrogacy may require termination of the surrogate’s parental rights. Posthumously conceived children may inherit only if the decedent clearly provided for them in estate plan - ning documents. Their rights vary by jurisdiction and often depend on documented intent and timing of conception. 9.2 Same-Sex Marriage Same-sex marriage is legally recognised throughout the United States. In 2015, the US Supreme Court’s landmark decision in Obergefell v Hodges affirmed that same-sex couples have a fundamental right to marry under the Constitution. US law encourages charitable giving through a range of federal tax incentives that play a central role in both income tax and estate planning. Cash Contributions and Non-Cash Contributions For income tax purposes, individuals can deduct up to 60% of their adjusted gross income (AGI) for cash contributions to public charities. Non-cash contribu - tions, such as appreciated securities, are deductible up to 30% of AGI. Contributions to private founda - tions are also deductible, though at lower thresholds – 30% for cash and 20% for non-cash assets. These deductions reduce taxable income, offering immedi - ate financial benefits while supporting philanthropic goals. 10. Charitable Planning 10.1 Charitable Giving
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