Kelley Rating (one asterisk = lowest, to five asterisks = highest):
- Ease of navigation, design of interface and learning curve *****
- Instructional documentation and help system ***
- Carries out the goal of the product as advertised *****
- Overall usefulness ****
When you evaluate such programs, first check out web-based calculators that are available for free. Then consider what additional features commercial software offers.
Calculating for Free
A variety of no-cost tools are available online for making charitable trust calculations, including charitable planned giving calculators that calculate the basic tax implications of common charitable gift planning techniques. Here are two examples:
(1) GiftLaw Calculator (from Crescendo Interactive) calculates the income and estate tax deductions flowing from charitable trusts and charitable gift annuities. The program is also available from Texas A&M.
(2) PhilanthroCalc for the Web online calculators for charitable gift annuities, charitable lead annuity trusts (CLATs), charitable remainder annuity trusts (CRATs) and charitable remainder unitrusts (CRUTs) are free web-based applications. The publisher offers demos of the basic Donor Direct version and the somewhat more full-featured Compliance NOW version. You can find Donor Direct on the Ohio State University website and Compliance NOW on the Henry & Associates website.
For more information about online applications, see "Web-Based Calculators -- Part I & Part II," in the February and March 2007 issues of this e-newsletter, available online and at www.trustsandestates.com.
What's It All About?
Charitable Financial Planner 2006.1 is a commercial software program costing $395 (less $25 if downloaded) that surpasses the free online calculators: It calculates the income tax effects of charitable trust techniques and generates an income tax savings pie chart, bar chart and schedule.
This program performs calculations appropriate to split-interest charitable transfers (for a fixed trust term or one-to-five lives), including CRATs, CRUTs, charitable lead unitrusts (CLUTs), CLATs, farm/residence remainders, pooled income funds and charitable gift annuities (immediate and deferred). It also computes the effects of QPRTs, GRATs and GRUTs and interrelated charitable and estate tax calculations involving the estate tax and related income-tax outcomes. Applicable federal rates (AFRs) are automatically downloaded, when so directed. The program also has a nearest-age calculator.
The charitable remainder trust life cases apply the 5 percent probability test of Revenue Ruling 77-374 with year-by-year reports and the 10 percent test. The exhaustion test of Internal Revenue Code Section 7520 is applied in appropriate models. Presentation graphs are included to illustrate the effect of varying payouts on the charitable deduction and to compare different charitable models.
The program is not yet optimized for Vista. In Vista, the Charitable Financial Planner's help file does not function and the popup screens do not operate correctly.
The strengths of this program are its simple, one-screen, interface and its emphasis on the income tax consequences of charitable trusts and related charitable planning techniques.
How Does It Work?
Charitable Financial Planner is easy to navigate. The planning techniques are listed on the left pane. Clicking on the selected technique causes the data entry and summary report to appear on the rest of the screen.
To operate the program, click on the name of the technique that you want to address (such as a charitable gift annuity) and enter the required data in response to the screen prompts. Then select the payment period, AFR and exhaustion method (where applicable). For split-interest trusts, you may choose to optimize the payout rate at the highest rate that will pass the 10 percent test and the exhaustion test.
After you enter data inputs and selections, the same screen displays a summary of the calculating factors and the donor's deduction for charitable techniques or the gift from the grantor for QPRTs, GRATs and GRUTs. A series of tabs allows you to display the income tax results, the savings on capital gains tax, an economic schedule of beginning principal, distributions and remainder value for each year and a graph reflecting the results of the applied technique. Each tab includes pie or bar charts to illustrate the results.
For each planning technique, you may bring up a screen of income tax inputs that allow you to define the client's general income tax picture. The entries include adjusted gross income, deductions and capital gains information. The program computes the basic income tax imposed on the donor for the year, the donor's effective and marginal income tax rates and the donor's income tax after the charitable income tax deduction.
The program allows you to generate a comparison bar chart displaying the fair market value and the charitable deduction of up to five different scenarios or trusts. This feature lets you to take a deduction from a particular calculation and insert it into the graph.
What About Help and Support?
Separate help topics may be displayed for each technique addressed by the program. Each help topic describes the utility of the technique, explains how to enter data and how to perform computations. The help topics also link to topical discussions on the Internal Revenue Service tests required for the technique to qualify for the targeted deduction and explanations of the reports generated by the program. Other substantive legal matters are not addressed in the help system because the program is targeted towards attorneys, not lay people. Technical support is available from the publisher by phone, fax or email.
Where Do You Get This Software?
This product is described on the Brentmark website. A downloadable demo is available, along with patches to the latest version.
You may purchase the software by contacting the publisher at:
3505 Lake Lynda Drive, Suite 212
Orlando, FL 32817-8327
This program is also available from Leimberg Associates, which offers a 30-day trial period.
While Charitable Financial Planner is a good commercial option, it's got three valid competitors: PhilanthroCalc, Cresecendo Pro and Planned Giving Manager.
PhilanthroTec publishes PhilanthroCalc for Windows Deluxe 7.0, which conducts charitable deduction calculations for CRATs, CRUTs, life estate agreements, CLATs, CLUTs, pooled income funds and charitable gift annuities. It prepares calculation reports and presentation text and graphics for all deduction calculations and cash flow models for CRUTS. The program includes "Presentations," which generates detailed reports with text explaining the techniques involved, diagrams illustrating the trust process and reports and graphs that explain the calculations. It costs $595. The publishers' DC product, which does not include "Presentations," does deduction calculations for CRUTS, CRATS, life estate agreements, CLATS, CLUTS, pooled income funds and charitable gift annuities. The initial price is $150.
Crescendo Pro covers all the charitable trusts; deferred gift remainder values with several lives; results of gifts, gift vs. sale, bargain sales/comparative planning of sales vs. deferred trusts; capital replacement trusts; and comprehensive estate-planning calculations. It includes a variety of dynamically generated flow charts, graphs, narrative plan summaries and drafts of documents. The price is $995, with an annual service fee of $595. Crescendo Presents does the basic calculations and generates diagrammatic graphic and audio presentation of the results. Crescendo Presents is priced at $150, with an annual service fee of $150 (or free with the purchase of Crescendo Pro.) A 90-day trial is available.
PgCalc's Planned Giving Manager is a full-featured program that calculates remainder values for all planned giving transactions, including gift annuities, and addresses investments modeling, wealth replacement, estate plans and retirement plans. It compares various gift scenarios, projects plan benefits over time and prepares proposals, graphs and reports, and other estate-planning calculations and presentations. It costs $1,295 with an annual service fee of $655. The Mini Manager version only does the charitable gift plan calculations, comparisons and related analyses; cost: $495 with an annual service fee of $425.
Charitable Financial Planner is one of several commercial software packages available. It performs charitable trust and related calculations, quickly calculates income and estate tax deductions and other information, thereby enhancing your ability to communicate these concepts to your clients. The program presents a clear, easy-to-use interface and conveniently addresses your needs for charitable trust and other split-interest trust calculations.
Trusts & Estates magazine is pleased to present the monthly Technology Review by Donald H. Kelley -- a respected connoisseur of the software and Internet resources wealth management advisors use to further their practices.
Kelley is a lawyer living in Highlands Ranch, Colo. and is of counsel to the law firm of Kelley, Scritsmier & Byrne, P.C. of North Platte, Neb. He is the co-author of the Intuitive Estate Planner Software (Thomson-West 2004). He has served on the governing boards of the American Bar Association Real Property Probate and Trust Section and the American College of Tax Counsel. He is a past regent and past chair of the Committee on Technology in the Practice of the American College of Trust and Estate Counsel.
Trusts & Estates has asked Kelley to provide his unvarnished opinions on the tech resources available in the practice today. His columns are edited for readability only. Send feedback and suggestions for articles directly to him at [email protected].