Whether you have an estate plan in place or are just beginning to think about how to distribute your assets, charitable giving has probably crossed your mind. Supporting a cause you believe in is, to be sure, a worthy endeavor. However, it's reasonable to be unsure of where to begin.
Giving to charity in your estate plan accomplishes several goals. It provides valuable assets to an organization important to the donor, as well as garners tax benefits both now and in the future.
Below are essential questions to keep in mind when you are making charitable giving part of your estate plan:
What type of assets do you intend to give?
It is important to keep in mind that different charities have varying abilities to accept donations. Most can take cash donations, but other assets such as securities might be too complicated for some charities to receive.
Is a charitable trust right for you?
There are two main types of charitable trusts: charitable lead trusts and charitable remainder trusts.
A charitable remainder trust generates income for you during your lifetime and donates the remainder of funds to your charity upon your passing. In addition, those who give to a charitable remainder trust benefit from an income tax deduction of equal value.
Alternatively, a charitable lead trust makes payments to the designated charity for a set period, with the remainder going to a beneficiary such as a family member.
Are you concerned about estate taxes?
Charitable giving can help to minimize the impact of taxes on your estate. Any gifts given to charity are exempt from estate taxes, so long as your donation goes to a 501(c)3 organization. Plus, there is no limit on how much of your estate can be given to charity.
Looking to the future
When it comes to planning your estate, it never hurts to have help. To learn more about your options for giving to charity in your estate plan, consult with an attorney experienced innovative estate planning.