Many of our clients find that providing financially for a favorite charity or charities helps them support the programs and institutions that are most important to them and can be a meaningful way to preserve their legacy. To further their philanthropic goals, we encourage clients to incorporate charitable gifts into their estate plans. At Clarity Legal Group we understand that for many clients, the desire to support charitable endeavors is something they hope will live on after they are gone, and we take great pride in helping them achieve this deeply personal goal.
Why Is Planning Necessary When Making Charitable Gifts?
Planning is important when making charitable gifts while you are alive and becomes even more important if you plan to continue that philanthropy after you are gone. While your motivation for making charitable gifts may be entirely altruistic, there are often tax benefits you should be aware of when donating to philanthropic causes. You may also want to retain a certain amount of control over how your gifts are used by the recipient. To do that, you need to understand the various ways in which you can make a gift and how you can structure gifts to ensure that they are used appropriately. Finally, you may want to encourage future generations to carry on your charitable gifting. Careful planning allows you to get your children and grandchildren involved in philanthropy now in the hope that they will continue the tradition after your death.
How Can I Incorporate Charitable Gifts in My Estate Plan?
Making direct gifts in your Last Will and Testament is not typically the best way to make the most out of charitable gifts. Instead, you may decide to incorporate charitable gifts into your estate plan using other tools and strategies, such as:
- Charitable Lead or Charitable Remainder Trust. Charitable lead trusts (CLT) and charitable remainder trusts (CRT) allow you to make a gift that benefits both a charitable and a non-charitable beneficiary. One beneficiary receives distributions for a pre-determined time frame after which the secondary beneficiary receives the remaining assets.
- Charitable Gift Annuity. A charitable gift annuity can also benefit both a charity and a non-charitable beneficiary, including you. Cash or other assets are donated to the charitable beneficiary and in return, the non-charitable beneficiary receives a fixed annuity payment for a specific amount of time or for the life of the beneficiary. The remaining cash or cash value is retained by the charitable beneficiary. As the donor, you may qualify for a charitable tax deduction and a guaranteed income stream for yourself or a loved one.
- Private Foundation. If you plan to donate significant cash or assets and hope to involve future generations in your philanthropy, a private foundation may be right for you. As a non-profit organization, a private foundation manages its own funds and decides what charitable gifts to make, and which charities should be recipients of those gifts. Creating a private foundation also allows you to retain a significant amount of control over how the assets you gift are used.
The estate planning attorneys at Clarity Legal Group look forward to helping you incorporate charitable gifts into your overall estate plan. Contact our office today by calling 919-484-0012 or filling out our online contact form.