A couple of years ago, Samantha was referred to Mission Hills Financial for a second opinion. She wasn’t sure exactly what she needed, but she knew some big financial changes were on the horizon. She had recently inherited a property that had appreciated significantly, and she was considering selling it. At the same time, she wanted someone to take a closer look at her taxes and estate plan.
Samantha hadn’t listed the property yet but was preparing herself to pay somewhere between $400,000 and $500,000 in taxes once it sold. No one had done a formal tax projection yet, but she understood it would be a significant hit.
As we reviewed her financial documents, including her revocable living trust, something stood out: Samantha had chosen to leave more than half of her estate to several charities that were meaningful to her. Her generosity was admirable—and, as it turned out, also opened the door to a smarter financial approach.
In a single planning meeting, we presented a strategy that changed everything. Since Samantha hadn’t sold the property yet, she could transfer it into a charitable remainder trust (CRT) first. This type of trust would allow her to sell the property without triggering capital gains taxes, potentially saving that entire $400,000–$500,000 tax bill.
The CRT would then provide Samantha with income for the rest of her life from the proceeds of the sale. After she passes, the remaining balance in the trust would go to the same charities she had already included in her estate plan.
With this strategy, we also amended her revocable trust: rather than splitting the rest of her estate between loved ones and charities, all of her remaining assets would now go to the people she cared about most. The charities were already fully accounted for in the CRT.
Samantha’s gift to charity was now giving back in multiple ways:
- She avoided a massive tax bill.
- She created lifetime income for herself.
- She secured a sizable charitable deduction that helped offset taxes on other income.
- She kept more of her estate intact for her family.
This wasn’t just a good outcome for Samantha—it was an example of how financial planning can align a person’s values with their goals, often in ways they didn’t even know were possible.
And while this particular solution worked beautifully because Samantha was already charitably inclined, we’ve seen similar strategies work for people who aren’t. When structured properly, CRTs can be paired with a wealth replacement trust—an approach that uses a portion of the income generated by the CRT to fund a life insurance policy for beneficiaries, effectively replacing the asset that went to charity.
It’s one of those rare financial tools where everyone wins: the client, their heirs, and the causes they care about.