fbpx

Charitable Giving and Estate Planning: Making a Lasting Impact

A Boca Raton estate planning attorney at Kramer Green can help you create a comprehensive estate plan that serves your needs. We can help you determine what your objectives are for your estate plan and how to meet those goals during the estate planning process, including any charitable giving you wish to include. Together, we can determine the best course of action for you to establish your legacy.

Advantages of Charitable Giving

Many individuals feel a deep sense of personal responsibility to give back to their communities, whether by funding their church, nonprofit organization, or social cause. Whatever type of charitable giving you choose, you can fulfill your desire to make the world a better place.

The federal government also actively encourages philanthropy by providing significant tax breaks for individuals who donate to these organizations. Charitable giving can reduce personal income tax burden and federal estate taxes for designated beneficiaries.

Types of Charitable Giving

You can structure charitable giving in various ways. Of course, you can make charitable gifts during your lifetime. While charitable giving most commonly consists of cash, it can also consist of stocks, real estate, vehicles, works of art, jewelry, and other valuable assets you own.

You can derive tax benefits for these gifts so long as they are made to qualified organizations according to the IRS, which include:

  • Religious organizations;
  • Nonprofit schools and hospitals;
  • War veterans’ organizations;
  • Domestic fraternal societies, associations, or orders created for charitable purposes;
  • Nonprofit charitable organizations; and
  • Federal, state, or local government agencies, so long as the funds are for public use.

However, tax deductions are limited, so you should consult your accountant or tax professional to ensure that you are making the most of your available assets for charitable giving.

Charitable IRA Rollovers

You can set up a charitable individual retirement account (IRA) rollover or qualified charitable distribution during your lifetime to remove retirement investment accounts from your taxable income. You can also use this charitable giving method to satisfy the minimum retirement account distributions that the law requires you to take after a certain age. Setting up this type of donation is very easy, as all you must typically do is name the charity as the beneficiary of the IRA.

Life Insurance Gifts

As with an IRA, you can name a charity as the beneficiary of your life insurance policy. The proceeds will go to the charity tax-free.

Wills

You can designate a charity as a beneficiary of your will. In other words, you can specify in your will that the charity receives a specific amount of money from your estate or a certain percentage of your estate. Leaving a charitable gift in your will is a simple way to include charitable giving in your estate plan.

However, wills typically must go through probate, which can be lengthy and expensive. Court costs, attorney’s fees, and creditor claims can significantly decrease the assets available for all heirs, including the charitable organization. Furthermore, interested parties, such as other beneficiaries of the will, disinherited beneficiaries, and even creditors, may contest the terms of the will. Even if a will contest is unsuccessful, it can further drain the will of assets and diminish the charitable gift you wish to leave. As a result, you may want to consider another structure for your estate plan involving charitable giving.

Charitable Trusts

You can transfer assets to a charity through a charitable trust.  Trusts have many advantages, including eliminating the need for probate, cost-savings on taxes, court costs, and legal fees, privacy from the public, and immediate access to assets for beneficiaries of the trust. There are two main types of charitable trusts, as follows:

  • Charitable Remainder Trusts (CRTs) – This type of trust makes distributions to two sets of beneficiaries: a lifetime (or fixed-period) income beneficiary (either the grantor/ yourself or a family member) and the named charity, which receives the trust’s remaining principal upon the end of the term or grantor’s death.

 

  • Charitable Lead Trusts (CLTs)—This type of trust provides similar tax benefits and periodic payments to the charity. The grantor’s named beneficiaries receive the trust’s principal after a specified period after the grantor’s death CLTs strike a balance between supporting a charity and still leaving an inheritance for one’s heirs.

Private Foundations

A private foundation is another avenue of charitable giving for your assets. Although this option requires significantly more involvement from your family members to continue operating, it can create a legacy that lasts indefinitely. There are also some tax benefits for this form of charitable giving.

Look to Kramer Green for Advice about Your Estate Plan

A Boca Raton estate planning lawyer at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. can assist you with all aspects of your estate plan, from bequeathing gifts to children, friends, and family to funding preferred charities and other causes. We know how to structure your estate plan to preserve your assets and relieve your loved ones of the burdens of complex probate and estate issues to the greatest extent possible. We also have the skills to help you carry out your wishes for your estate.

Our objective is to guide you through the complex legal estate planning process. Contact our office today at (954) 966-2112 or online to schedule a time to discuss your estate planning issues with our Boca Raton estate planning attorney.

Menu
Font Resize