For direct gifts, a donor advised fund is an interesting option. In effect, the donor can "bank" future years' contributions in a year when he or she can gain maximum tax advantage due to the large pending capital gain. The donor may recommend grants from the donor advised fund to other charities over time. The donor advised fund also presents an estate planning opportunity, if the donor makes his or her children a successor advisor. Through this gift and future gifts or bequests, the donor advised fund can grow and serve the children's future philanthropy as well. Beyond the children's lifetime, the fund can support in perpetuity the original donor's favored charitable purposes.

By giving to a charitable remainder trust (CRT), the donor (and spouse) will receive a life income, which is taxed more favorably than ordinary income. A portion of each year's distribution from the trust is taxed as capital gains and a portion is taxed as return of capital, depending upon the CRT's investment returns. The CRT can be structured either to provide a constant income (an annuity trust) or to provide an amount that varies year to year based on the CRT's change in value (a unitrust). If the CRT is invested successfully, a charitable remainder unitrust can provide a highly favorable return to the donor.

The charitable deduction is less for a CRT than it is for a direct gift for two reasons. First, the charity won't receive the remainder assets for a period of time. Second, the donor receives annual distributions, which will be more or less depending on the rate specified in the trust instrument. An often overlooked option in future years is that the donor can at any time make a gift of his or her remaining life income, which can be very substantial in the case of a unitrust if the value has increased over time. The value of this deduction also increases as the donor grows older and his or her life expectancy declines. Finally, the donor advised fund can serve as the charitable beneficiary of the CRT, further enhancing the ability of the fund to serve one's children's philanthropy and to meet the long-term charitable objectives of the fund.

If you are charitably inclined and are fortunate enough to incur a windfall, please consult your financial, estate and tax advisors as soon as possible. You may also wish to contact your local community foundation, where staff is likely to have experience in helping donors faced with this kind of opportunity.