What are Some Common Ways to Include Charities in My Estate Plan?

Charitable giving can be a part of your legacy.

You love giving.

You serve your church.

You volunteer at a local shelter.

You cut checks to a beloved nonprofit.

According to a recent Baltimore Voice article titled “Estate planning and charitable giving,” you can incorporate this altruism in your estate plan.

Include giving in your will.

Many people do not want to choose between providing for loved ones or giving to a charity.

You can decrease your estate tax liability by including charitable giving in your estate plan.

As a result, you could increase the amount you are able to leave to your loved ones as well.

It can be a win-win situation.

Include charity in your retirement account.

Through distributions from your retirement account, you can ensure all of the funds will be received by the charity

Why?

Charities have exemption status from both estate taxes and income taxes.

When the account is liquidated, the full monetary value will be able to remain with the charity.

Set up a charitable trust.

Trusts can be a useful estate planning tool for a variety of goals.

A “split-interest trust” allows you to retain some of the benefits of the assets you contribute to the charitable trust.

How does it work?

After you create the charitable trust, you fund it with assets.

Commonly, such assets are "highly appreciated."

This means the assets would be subject to significant "capital gains" taxes were you to sell them.

When you contribute the assets, you receive a charitable tax deduction on the assets transferred into it.

You retain control of the assets until your death and even an income stream.

Once you die, the assets pass to the charitable organization.

This is simply one trust option.

There are a number of trust types.

The one just illustrated is a "charitable remainder trust," but another one of the available "flavors" may better fit your situation.

Whether you use a trust or another tool, work with an experienced estate planning attorney to make the right decision for you, your loved ones, and your beloved charity.

Reference: Baltimore Voice (January 27, 2019) “Estate planning and charitable giving”