Charitable Gifts in Your Estate Plan

It is very common for individuals to want to leave a legacy to their favorite charity. Gifts to charities can be worked into any estate plan, and will be tremendously appreciated. However, if an estate plan is not properly structured, it can create a lot of stress and expense for the beneficiaries. Large fees and taxes can be avoided with proper estate planning.

There are many different options and estate planning tools to make charitable gifts. What works best for you will depend on your goals and estate.

One option is a charitable lead trust. This type of trust is called a charitable lead trust because the charity gets funds immediately, and the principal of the trust ultimately comes back to the donor or donor’s family. A charitable lead trust pays income to your chosen charity for a specified number of years after your death (or before your death if you wish). When that period is up, the trust principal passes to your family members or other heirs without any estate or gift tax consequences.

Another option is a charitable remainder trust, which works in the opposite way of a charitable lead trust. This trust will give your family member beneficiary or other heirs a lifetime stream of income, but when they die, the charity of your choosing will get any remainder.

You can also name your chosen charity as a beneficiary of an IRA or other employer-sponsored retirement plan. The charitable gift will be deductible for estate tax purposes, and the charity will not have to pay income tax on the funds it receives.

You can also establish a private foundation or donor advised fund. A private foundation offers you the considerable freedom to control distributions by placing restrictions on how your gifts are used by charities. A donor advised fund will allow you to maximize your income tax savings on your regular monthly or weekly contributions to church or charities. This is a favorite legacy tool for many wealthier clients because their children can operate the foundation and make donations to causes that their parents favored.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about charitable gifts or foundations, or creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.