Charitable Giving and Estate Planning

Many of us have a cause or charity that is near and dear to our heart. When you begin thinking about estate planning and how you want your assets distributed, you may want to consider the inclusion of charitable giving in your plans. Even if that has not crossed your mind yet, it might be something you should explore. After all, there are benefits to charitable giving beyond supporting a good cause. To help ensure that you are maximizing the efficiency and effectiveness of a charitable gift in your estate plan, it is important to consider your options and weigh all accordingly.

Charitable Giving and Estate Planning

There are a few different ways you can leave money to charity through the estate planning process. One of the simplest ways to do so is probably by explicitly naming a charity in your will or living trust. Both are means of specifying how you want your assets distributed upon your death. Either estate planning tool will allow you to identify beneficiaries and specify who is to inherit what. A charity can be named as a beneficiary. You could even establish several trust funds with a specific charity as the beneficiary of each one. This could have the added benefit of lower the amount of your taxable estate and, thus, lower your potential estate tax liability.

You could also use your IRA distributions as a means to support a charity. You could do this a few different ways. First, you could name a charity as the beneficiary under t your IRA. Alternatively, or additionally, you can choose to take advantage of the benefits of charitable giving, like the tax break, now and give required minimum distributions (RDMs) from your IRA to a charity now. RDMs are those IRA distributions you are required to take from retirement accounts when you reach a certain age. Giving these RDMs directly to a charity is considered to be a qualified charitable distribution (QCD) which permits the exclusion of the donated amount from your income and, thus, limits your income tax liability. You are permitted to give up to $100,000 per year to charities directly from an IRA.

Alternatively, you may want to set up a gift through a community foundation or create a charitable remainder trust. Using a community foundation will allow you to develop your own charitable fund where you can structure your charitable giving in a way that optimizes its impact as well as maximizing the tax benefits. Alternatively, a charitable remainder trust can be a great way to start giving back to a charity while you are still alive and, at the same time, reap the benefits of the tax-free donations and reducing your taxable income.

Estate Planning Attorneys

Charitable giving in estate planning can be a great way to support those causes that are near and dear to your heart. The potential tax breaks and efficient giving are certainly excellent benefits to consider as well. To evaluate all of your charitable giving options for your estate plan, talk to the knowledgeable estate planning attorneys at Jones, Gregg, Creehan & Gerace. Contact us today.