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With reports of the "me" generation becoming a "we" generation, financial advisors across the country are brushing up on the ins and outs of charitable giving to help their clients effectively indulge their philanthropic tendencies.

"Once again, the Boomer generation is not following the path of their parents and grandparents, who fed portions of their estates into big, federal charity pools," said Doris Rubenstein, principal consultant with PDP Services in Minneapolis, Minn. "Groups like the United Way, where you hand it over and hope they do the right thing, don't have as wide an appeal with Boomers, who are more likely to give to smaller organizations. They're inclined to think globally but give locally."

These smaller charities could grow into big charities, especially if their supporters give wisely. Charitable trusts are gaining a reputation as wise strategies because they allow givers to reduce their estate taxes, eliminate capital gains taxes and claim income tax deductions. After all, less money for the IRS means more money for charity.

Still, giving via a charitable trust requires serious research. The two main types of charitable trusts are Charitable Remainder Trusts and Charitable Lead Trusts, both of which involve the creation of a trust that gets divided between your beneficiaries and your charity.

A Charitable Remainder Trust (CRT) places an investor's assets into a trust and starts making regular payments to the giver and his or her beneficiaries—for example, a spouse or dependent child. When this payment term, usually designated to last as long as the life of the giver, runs out, the remainder of the trust (the corpus) goes to the charity of the giver's choosing. Assuming that investments made with the trust money have appreciated at a decent rate, there should be a nice chunk of change earmarked for the charity.

Alternately, a Charitable Lead Trust (CLT) works the opposite way, so that instead of the beneficiaries getting the regular payments, it's the charity that receives them. Then, at the end of the payment term, the beneficiaries receive the corpus.

So which one is better?

"The use of … these techniques are dependent on a number of factors," said Frank San Pietro, director of operations and client service at Gassman & Golodny in New York. He pointed out that there are so many variables—length of the payment term, the types of assets, the charity itself—that the question of which is better doesn't really apply.

"It's not really a question of better but more a matter of which is more appropriate," he explained.

With that in mind, CRTs might be suitable for someone who wants to leave a beneficiary with an immediate income stream, often the case for special needs-type planning. After all, under the guidelines of CRTs, the beneficiary is the one getting the fixed return, while the charity is the one taking the investment risk. Meanwhile, the reverse arrangement in CLTs puts the beneficiary at risk but also includes some tax advantages for the recipient, with a low year-to-year taxable income.

"None of these should be done without talking with a knowledgeable tax planner," Rubenstein said. "People probably want to become educated on these arrangements at about the same time they retire."

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