How to Make Charitable Giving Part of Your Estate Plan?

Estate planning allows you to make important decisions about how your assets and property should be distributed, as well as who should handle your affairs when you die or if you become incapacitated. For many people, charitable giving is an important part of their estate planning goals, particularly if a cause or organization aligns with their personal beliefs. There are a number of charitable giving strategies that can help you achieve your goals while minimizing tax implications. If charitable giving is an important part of your estate planning goals, an experienced estate planning lawyer can help you navigate every step of the process, address all your questions and concerns, and ensure that your wishes are fulfilled.

How Do I Ensure that Charitable Giving is Part of My Estate Plan?

Several strategies will help you meet your charitable giving goals as you navigate the estate planning process, including:

 

  • Leave money to a charity you have identified in your will. A will allows you to specify how your assets should be distributed after your death. In addition to identifying your beneficiaries and who will inherit your assets and property, a will can also be used to designate a charitable bequest and establish a trust fund for a specific charity. In addition to being one of the simplest ways to donate to a charity through estate planning, naming a charity as a beneficiary in your will can lower the amount of estate taxes.
  • Contribute a charitable rollover from your IRA. You can name a charity as an IRA beneficiary or take advantage of charitable tax breaks by rolling over up to $100,000 annually from your IRA to a charity. The amount you contribute will count towards any required minimum distributions (RMDs), which you are required to take from retirement accounts once you have reached a certain age. One of the advantages of giving funds directly to a charity from your IRA is that it is considered a qualified charitable distribution (QRD), which allows you to exclude the amount from your income, which means you will not have to pay taxes on it.
  • Establish a gift through a community foundation. This allows you to establish a financial legacy through your own charitable fund. You can decide how much to give and to which charity. Community foundations allow donors to structure their gifts to have the greatest impact while taking advantage of tax benefits.
  • Give your property. Another option for charitable giving is to gift real estate to a charity. You can gift a vacation home, farm, condo, or other property to the charity while reserving lifetime use.
  • Gift appreciated stock. Donating appreciated stock is one of the easiest ways to make a significant financial gift to a charity. If the stock qualifies for long-term capital gains treatment, you can avoid paying capital gains taxes on your holding.
  • Create a charitable remainder trust. If you are interested in giving to a charity while you are still alive, this option allows you to make tax-free donations and reduce your taxable income.
  • Use life insurance or a charitable gift rider. Proceeds from your life insurance policy can cover funeral costs and other expenses. In addition, you can name one or more charities as a beneficiary on your life insurance policy. You can pursue several options when using life insurance as a strategy for charitable giving. For example, you can gift a nonprofit an existing whole or universal life insurance policy while you are still alive, or you can name a charity as a benefactor of your life insurance policy after you die.

What Factors Should I Consider Before Making Charitable Giving Part of My Estate Plan?

All decisions regarding estate planning should be given a great deal of thought and consideration, including how charitable giving fits into your estate planning goals. Keep the following tips in mind as you navigate the estate planning process and consider the charitable giving plan that works for you:

 

  • Identify the charities you want to support. Whether you want to donate to an organization that positively impacts your community, a religious organization, a soup kitchen, or a homeless shelter, choose the charity you want to support and decide how much you want to contribute.
  • Put it in writing. For your charitable trust wishes to be legally binding, they must be in writing. Your estate planning lawyer can assist you with this process and ensure your wishes are legally binding.
  • Choose your beneficiaries. You may designate a single charity or multiple charities as beneficiaries of your estate. You can also specify a percentage of your estate that a charity should receive.
  • Set up a charitable trust. This will ensure that the money you have set aside for charity is used as intended. A trust also has tax benefits.
  • Consider a charitable remainder trust. This allows you to donate assets to a trust and name a charity as a benefactor. Once the charity has received the allocated funds, your heirs will receive the remainder of the trust.
  • Consult with an estate planning lawyer. Estate planning can be an overwhelming process, particularly if you are unsure where to begin and how to ensure that all of your estate planning goals are met, including charitable giving. An experienced estate planning lawyer will offer effective strategies to maximize the benefits of your charitable giving and address all of your estate planning questions.

The Somerville Estate Planning Lawyers at Lyons & Associates, P.C. Assist Clients with All Aspects of the Estate Planning Process

 If you have questions or concerns about estate planning, including how to incorporate charitable giving into the planning process, do not hesitate to contact the Somerville estate planning lawyers at Lyons & Associates, P.C. Our skilled legal team will discuss the options for charitable giving and recommend the best course of action to protect our legacy. To schedule a free consultation, call us today at 908-575-9777 or contact us online. Our offices are located in Somerville, Morristown, and Freehold, New Jersey, where we serve clients in Somerset, Woodbridge, Morristown, Parsippany, Rockaway, Short Hills, Chatham, Randolph, Madison, Morris Plains, and Monmouth County.