JOURNAL OF PRACTICAL ESTATE PLANNING 47 October–November 2007 Margaret Stout is an Assistant Professor in the Political Sci- ence Department at Bridgewater State College in Massachu- setts. She specializes in public administration and nonprofit leadership and management. Dr. Stout may be reached at (508) 531-1387 or margaret.stout@bridgew.edu. Leigh Harter is the Managing Director of the Insurance Design Center, LLC, a fee-based life insurance consulting firm promoting advocacy through education and advice. Ms. Harter leads the case design division. Ms. Harter may be reached at (847) 943-0800 or lharter@idc-llc.com. © 2007 M. Stout and L. Harter Charitable Remainder Trusts Part I: The Aspiration of Stewardship By Margaret Stout and Leigh Harter In this first part of the two-part article, Margaret Stout and Leigh Harter discuss the history and philosophical beginnings of charitable remainder trusts and the impact of this giving strategy on the sustainability of nonprofit organizations. Introduction This two-part series discusses both the philosophy and the nuts and bolts of Charitable Remainder Trusts (CRTs) and Charitable Remainder Unitrusts (CRUTs) in particular. Part I will focus on the spirit in which these financial tools were created. The original purpose of these trusts was not about tax shelters for the wealthy, short-term benefits to cash-flow or legal codes and loopholes. It was not about complex forecast modeling that accounts for every possible financial variable. It was and continues to be about stewardship. It is about a community leader who had a plan for enabling common people to advocate for their values, while taking care of themselves and their families both ethically and financially. More importantly, it is a lesson for public policy and estate planning practitioners whose foresight can either encourage or destroy this charitable intent. Charitable Intent: Footprints in the Sands of Time Most research supports the assertion that the pri- mary reason for making a charitable donation is the desire to create public good. “Philanthropy is … about donors’ using their funds to explore their own private visions of the public good.” 1 “Etymologi- cally, philanthropy means ‘love of human beings.’ In practice, the term is often used to describe gifts of the wealthy to the non-wealthy.” 2 However, the desire to be philanthropic can be felt by anyone who seeks to further the public good. Harvard theorist Peter Frum- kin provides an excellent overview of the values and characteristics of the nonprofit sector. “An important part of nonprofit and voluntary activity is expressive in character and speaks to the need people feel to enact their values through work, prayer, philanthropy, and volunteerism.” 3 In other words, charitable intent seeks to leave one’s footprints in the sands of time. Yet the desire to act philanthropically must be sup- ported by the ability to do so. Therefore, financial considerations play a secondary but crucial role in charitable intent, in essence dictating who within our society has the opportunity to express themselves, and which values find enactment. Our goal is to ex- pand the ability for philanthropic action, making the ability to use this strategy more inclusive. Advocates in the financial services world who understand the advantages of long-term charitable planning could help their clients build a long-term plan that encour- ages altruism and charitable intent while supporting wealth creation. Many parents attempt to build a set of values into their wealth transfer planning by restricting trust income should the children not meet specified career or educational objectives, but there could be a better way. Charitable intent is based on multifaceted motiva- tions. “Human behavior is complex, and ultimately reca mode ast m alue lie r the rf eir va fami e ab en es, It en ha or or fin ste ha reca nanc ewar ad a p ad a p r the ast m cial v rdsh plan plan eir va mode varia hip. n for n for alue was an bo ng e taking contin com mo care of ues to b ity lead ple to a themsel w c bl pu e fore esigh c ht y an ca n e it er Yet po t te d b y the abi it hila o d o so o. T h ca refo re, fin l anc l wh