Why Incorporate Charitable Giving into Your Estate Planning?
Do you have a cause that you care about? In addition to helping a notable organization, giving to charity can strengthen your legacy and potentially help reduce estate taxes. Whatever the nonprofit organization that you hope to support, you should understand that giving to charities benefits multiple parties.
By incorporating charitable giving into your estate planning measures, you can help yourself and your loved ones in a number of ways. Charitable giving can help reduce the size of your taxable estate, so your estate will pay less in estate taxes and leave more to your loved ones. Charitable gifts you give during your lifetime may result in an income tax deduction. Philanthropy also provides a sense of fulfillment and community building. Being informed about charitable giving helps you make informed estate planning decisions that meet your goals and the needs of your family members.
Every gift or bequest you make in your estate plan should be carefully considered. For that reason, among so many others, we recommend that you retain professional legal representation from an experienced estate planning attorney. Our law firm has extensive experience representing clients’ estate planning needs across the Woburn area, and we would be proud to represent your interests as you explore charitable giving options for your estate plans. To learn more about estate planning and charitable donations, please contact our Woburn, MA, law office to schedule your initial consultation today.
How Can You Add Charitable Giving to Your Estate Plan?
While donating to a cause you believe in is relatively easy, it takes more planning to ensure that your charitable giving benefits you and your estate plan.
There are several methods for including charitable giving in your estate planning measures. Among the simplest options is to name a charity organization as your beneficiary. You can name charities as beneficiaries of your will, trust, or IRAs. In your will, you can state that you want a certain amount of your estate assets to be left to a charity organization of your choosing. In some cases, you may even be able to dictate how the charity uses the funds you donate.
By including gifts to charities using a will, trust, or IRA, your donation will go to the charity after you pass away. Using these methods, you can alleviate any concern you may have about donating too much too early and leaving yourself without the funds you may need during your lifetime.
You could make a tax-free gift of up to $18,000 per person each year (2024 figure). You could give this amount of money to your beneficiaries or a charitable organization. This means that you could give up to $18,000 to as many people as you want without having to pay any taxes on the gifts. For example, a person could give $18,000 to each of his 10 grandchildren in 2024 with no gift tax implications.
The benefit of giving away money is that you can help reduce the size of your estate to minimize estate taxes. Another benefit is that the recipients of the gifts won’t need to pay taxes on the amount they receive.
What about donating retirement plan assets during your lifetime? Typically, you would need to take a distribution from your retirement account, treat that money as income for that year (it would be taxed), and then give the cash to the charity. However, if you’re age 70 ½ or older, you can contribute up to $100,000 from your IRA directly to the charity without having to pay income tax on the amount. This is called a qualified charitable distribution and is limited to IRAs only. There are some rules and considerations to take into account when thinking about this option.
You could consider creating a charitable trust. Charitable trusts allow you to support charities while benefiting from tax and estate planning advantages. They can be structured in many ways in order to meet your specific needs and goals. The benefits of this type of trust include tax deductions, reduced estate taxes, and the ability to leave a lasting legacy.
With so many options, knowing where to begin or what to choose for yourself and your estate plan can be difficult. That’s why we’re here. We proudly provide legal counsel to clients interested in estate planning and charitable donations. To learn more about how charitable giving and estate planning benefit each other, please contact our Woburn law office to schedule a consultation today.
What Are Different Types of Charitable Trusts?
A charitable remainder trust is an irrevocable trust, meaning it can’t generally be altered or dissolved once it’s created. Charitable remainder trusts allow you or the trust beneficiaries to use income generated by assets in the trust. The payments continue for a specific term, which can be up to 20 years or the life of one or more beneficiaries. The remaining assets at the end of the term go to one or more charities. You must choose IRS-approved charities when making donations with a charitable remainder trust.
There is also a type of trust known as a charitable lead trust. This type of trust is irrevocable and is established by transferring estate assets into the trust and then donating a stream of income from those assets to one or more charitable organizations of your choice. If any money or assets remain at the end of the period you intend to donate, the balance will be dispersed to other named beneficiaries. Your estate plan may benefit from a charitable lead trust by receiving a gift tax deduction credit based on the value of the income stream to the charity. One downside to consider for charitable lead trusts is that they require annual trust administration management.
Do You Need the Legal Help of an Estate Planning Lawyer?
There are numerous legal issues to consider and no shortage of options for those interested in estate planning and charitable giving. It can be overwhelming to analyze the options and determine the best options for you.
Our legal team has years of experience providing knowledgeable legal counsel to clients interested in incorporating charitable giving into their estate plans. To learn more about how we may assist, please contact our law firm today to discuss your questions and concerns during a consultation.
Schedule a Consultation with an Experienced Estate Planning Attorney in Woburn, MA, Today
The Heritage Law Center proudly represents clients across eastern Massachusetts interested in estate planning and charitable giving. We would be honored to assist you in your legacy planning as you consider incorporating charitable giving into your estate plan.
To learn more about our legal services, please contact our Woburn law firm to schedule a consultation with our attorney today. You can reach our office at 617-765-9307.
