How Your Estate Planning Can Help Charities You Care About
Making a gift to a charitable organization is a meaningful and impactful decision – one that can benefit both the causes you care about and your financial and estate planning goals. While the decision of how and when to give is personal, it can play a significant role in shaping your legacy. Below are some common ways your estate plan can help support the charitable organizations you care you.
Common Ways of Giving to Charities
There are numerous ways to give to charity, both during life and after your death. The approach that works best for you will be unique to your needs, including the value of the intended gift, the type of asset being donated and your tax situation. It’s important to work with an attorney experienced in charitable estate planning to determine the approach that works best for you. The attorneys at Abelaj Law, P.C. have helped many individuals incorporate charitable planning in their estate legacy and we can assist you in this process. Contact us today to get started.
Testamentary Gifts in a Will or Trust
A common way to support a charitable organization in estate planning is through a bequest in a will a trust. This is also known as planned giving. A person can specify a dollar amount, percent of estate, or specific asset (such as stock or real estate) to a charity. There is no federal limit on the number of charitable bequests an estate plan can have, which can allow for a donor to support multiple organizations.
The bequest can be outright or have restrictions on how the funds are used. A Trust or endowment can include instructions on how the funds are to be used by the charity over a long period of time.
Name a Charity as Beneficiary
Charities can be named as beneficiaries of your retirement assets, annuities or insurance policies. This can allow the donor to support specific organizations while also reducing estate taxes. A benefit of this approach is that it avoids probate and allows the charity to receive the bequest promptly.
Create a Donor Advised Fund
While a Donor Advised Fund, commonly known as a “DAF”, is not technically part of an estate plan, it allows a donor to contribute assets during their lifetime, take an immediate tax deduction, and recommend grants to charities over time. Donors can contribute to the funds as frequently as they like and then recommend grants to charities at a later date. This approach works well for donors who would benefit from a large charitable deduction in one year without immediately having to choose a specific charity to receive the funds.
Charitable Remainder Trust
A charitable remainder trust (“CRT”) is an irrevocable trust that allows a person to donate assets to charity and draw annual income for life or for a specific time. A CRT can offer financial benefits such as allowing a donor to plan major donations to charities, allow a donor to defer income taxes on the sale of assets transferred to the trust, and may allow a donor a partial charitable deduction based on the value of the charitable interest in the trust.
How to Get Started
As you consider including charitable donations in your estate planning, start by reflecting on the types of charities you have supported in the past, the types of assets you have contributed, whether you want to make an unrestricted gift or include certain parameters, and when you want the charity to receive the gift.
Identify the Causes You Care About
Think about the issues or organizations that have had a meaningful impact on your life. These could be nonprofits you’ve supported in the past or causes that reflect your values. There are many organizations out there doing meaningful work that would appreciate your donation.
Review accounts and documents
Review your estate documents every 3-4 years to ensure these documents reflect your intentions. If there is a charity you want to add as part of your estate documents or want to look at more robust options to support causes you care about, reviewing your documents is a great way to start.
Talk With an Experienced Estate Planning Attorney
For many families considering charitable giving as part of their estate plan, legal guidance may be beneficial. An experienced estate planning lawyer can make sure all documents are in order and help families determine the types of charitable giving that would best fit their needs. Consider visiting with the estate planning lawyers at Abelaj Law, P.C. at 212-328-9568 to learn more about how to integrate charitable giving into your estate plan.