If charitable gifting is part of who you are and something you believe is important, you likely want to include philanthropy in your estate plan. Fortunately, there are several ways to incorporate charitable gifts into a comprehensive estate plan. With that in mind, an Essex Junction attorney at Unsworth LaPlante, PLLC offers suggestions and options for ways to incorporate philanthropy into your estate plan.
Philanthropy and Your Last Will and Testament
You can make charitable gifts in your Will; however, there are several reasons why making charitable gifts in your Will is not the best option. To begin with, using your Will to make charitable gifts means you will almost surely miss out on tax benefits that would otherwise be available when making charitable gifts. In addition, when you make a direct gift in your Will, you lose all control over how that gift is used once the transfer is complete. Finally, if you hope to involve your children, or other younger relatives, in your philanthropic endeavors, you will need to use a more complex method of continuing your charity work.
Charitable Lead or Charitable Remainder Trust.
Charitable lead and charitable remainder trusts are specialized trusts that allow you to gift to both a charitable and a non-charitable beneficiary. With a charitable lead trust (CLT) a charitable beneficiary receives distributions from the trust for a specific period first. At the end of the designated period, the remaining assets are distributed to the non-charitable beneficiary. A charitable remainder trust (CRT) works in reverse with the non-charitable beneficiary receiving distributions first and the remainder going to the charitable beneficiary.
Charitable Gift Annuity
Like other types of annuities, a charitable gift annuity begins as a contract between the donor (you) and a qualified charitable organization. Under the terms of that contract, the donor gifts cash or other assets to the charity (the âdoneeâ) in return for which the charity agrees to pay the annuitant (the donor) an income for life. The maximum number of annuitants is two and payments may be made to them at the same time or successively. For example, if you are married and you and your spouse establish a charitable gift annuity, you could set of the payments to be made to you until your death at which time the payments would transfer to your spouse. Upon the death of the donor(s), the charity keeps the remaining cash or assets from the original gift.
Contribute a Charitable Rollover from Your IRA
While you can name a charity as an IRA beneficiary, you can also choose to make use of a charitable tax break for IRAs during your lifetime. You can gift up to $100,000 per year to charities directly from your IRA, and the amount can count toward any required minimum distributions (RMDs). Giving the funds directly to charity from your IRA is considered a qualified charitable distribution (QCD), allowing you to exclude the amount from your income so you donât pay taxes on it.
Create a Private Foundation
A private foundation is the most complex, yet most potentially rewarding, option. A private foundation is a non-profit organization that manages its own funds and can be used to make charitable gifts to numerous and varied causes. Because of the cost involved in setting up and operating a foundation, this option is only practical if you plan to donate a sizeable amount to charity in your estate plan. Along with numerous tax advantages, one of the biggest benefits to creating a private foundation is that it gives you the opportunity to involve future generations in philanthropic gifting in a hands-on manner. As the creator of the foundation, you can establish guidelines for what type of gifts will be made and what type of beneficiaries will be considered; however, your children, grandchildren, and future generations will be able to experience charitable gifting first-hand through the operation of the foundation.
Do You Want to Include Philanthropy in Your Estate Plan?
For more information, please attend one of our upcoming FREE webinars. If you have questions or concerns about how to include philanthropy in your estate plan, contact an experienced Essex Junction estate planning attorney at Unsworth LaPlante, PLLC by calling 802-879-7133 to schedule your appointment today.
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