FOR MANY OF US, planning one's estate includes determining which charities will receive donations, and in what form the donations will be made. For those holding appreciated stock, a strategic move could be to create what's known as a charitable remainder trust, which allows you to roll the tax advantages of charitable giving into trust form.

How It Works
Let's say you bought $10,000 worth of stock 10 years ago. Today those shares are worth $100,000. You want to sell the shares but avoid the $13,500 in capital-gains taxes. What to do? If you put the stock into a charitable remainder trust, the trust can sell the stock tax-free, and for the next 20 years, the trust will pay you an annuity of, say, 6% of the principal. On top of that, you get a substantial tax deduction on the gift. The result: You move the money out of Uncle Sam's reach, create a steady flow of income for you and your heirs, and at the end of 20 years, the principal goes to charity. "I find that (a charitable trust) unifies a family," says Mill Valley, Calif., inheritance consultant John Levy. "Instead of fighting over who gets the jewelry and the antiques, it's a decision everyone can feel good about."

A Simpler Solution
An easier variation on this strategy is to just give appreciated stock to the charity of your choice outright. Say you have Coca-Cola shares that you were given as a child. The cost basis is just about nil. If you sell the stock for $20,000 and give the proceeds to charity after paying the capital-gains taxes, the charity gets only about $17,000, and you get a $17,000 tax deduction. But if you give the stock to the charity, which is tax-exempt, it can sell the shares and keep the whole $20,000. And you get a $20,000 deduction. This is what we call a win-win situation.