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Doing estate planning for a client requires me to ask lots of questions. One I always ask is, “What is your charitable intent?” The different answers could fill a small book. But here’s the answer that has always been in first place: “Irv, if you can show me how to give to charity without reducing what goes to my family, I will become very charitable.”

There are many ways (legal) to give huge sums to charity without reducing the amount your family will receive. We have figured out how to use the tax law so you can accomplish three specific goals at the same time: 1) Enrich charity. 2) Enrich your family. 3) Reduce taxes.

This column will give you a case study of clients who have accomplished these three goals and how they did it.

Here are the facts of the first case study: Ben, a widower, is 60 years old. He would like to make a substantial charitable contribution to “Favorite Charity” at his death, but he does not want to reduce the inheritance to his family. Ben owns a $500,000 residence free and clear. He is in a 35 percent income tax bracket and 50 percent estate tax bracket. Here is the three-step plan we created for Ben.

Step 1: Ben gets a $100,000 home equity loan from his local bank.

Step 2: Ben uses $80,000 (of the $100,000) to buy an SPLI (single premium life insurance, on which you pay only one premium when the policy is purchased. The SPLI has a death benefit of $345,000. The policy is gifted to “Favorite Charity.”

Step 3: Ben’s income tax savings from the $80,000 gift to “Favorite Charity” is $28,000, which he puts into an ILIT (irrevocable life insurance trust). In addition, Ben puts the balance of the loan ($20,000) into the ILIT, which is a total of $48,000. The ILIT uses the $48,000 to purchase an SPLI with a death benefit of $207,000. Joe’s kids are the beneficiaries of the ILIT.

Let’s go down the road to the day Ben dies. “Favorite Charity” gets the $345,000 death benefit from Step 2. Ben’s kids get a net of $157,000. Here’s how: The $100,000 home equity loan is a liability of Ben’s estate. So the estate tax is reduced by $50,000. Add the $207,000 ILIT policy death benefit, which is tax-free, and you have $257,000 gross. Of course, $100,000 of the policy proceeds pay off the home equity loan, leaving the kids with $157,000 net. Remember, in a 50 percent estate tax bracket, Ben would have to leave his kids $314,000 to net $157,000.

What’s the cost to Ben to get $345,000 to charity and $157,000 net to his kids (a total of $502,000)? Only the annual cost of interest (fully deductible for income tax purposes) on the $100,000 loan. When all is said and done, Ben and his kids will make an after-tax profit. The exact amount will depend on the rate of loan interest, the income tax rate and how long Ben lives.

Here are a few variations of the case study that might apply to you.

Variation 1: You can use any asset to collateralize the $100,000 loan or just use cash. (Of course, the loan could be more or less than $100,000.) Say you use cash. Remember, in a 50 percent estate tax bracket, $100,000 is only worth $50,000 after taxes. So you will be turning $50,000 into $502,000 ($157,000 for your family and $345,000 for charity). And you can increase (or reduce) the amount going to your family or charity by changing the SPLI amounts. To put it another way, you can divide the $500,000 pie any way you like.

Variation 2: Suppose you are age 60, like Ben, and married (your wife is also 60). Then you could buy a second-to-die SPLI using the same $100,000 and turn it into a total of about $750,000 to be divided (almost any way you like) between your family and charity.

So you want to learn more about how to give to charity, yet multiply your family’s wealth, using the tax law as your shield and without investment risk? Then go to my Web site, www.taxsecretsofthewealthy.com, and click on “Personally Designed Philanthropy.”