Rory S. Morse, Esq.
The estate planning process can sometimes involve difficult topics. We may feel that we are confronting the inevitability of our deaths; the possibility of needing to rely on friends or family to manage our affairs can seem intimidating. The silver lining is that we also have an opportunity to benefit the people or causes that are important to us by providing for them in a way we may not have been able to during our lives.
There are many ways to benefit family and other loved ones through estate planning, whether it be leaving money or other assets to family and friends directly, or by leaving assets in trust to provide structure and incentives based on our values. These options are discussed in other articles; here, I will discuss tools available through estate planning to benefit charitable or otherwise non-profit organizations.
Possibly the most straightforward method for charitable gifting is to add a qualified charity as a beneficiary of our will or trust plan. The plan can be structured to give specific assets, a flat dollar amount, or a percentage of the total estate. Oftentimes these gifts are tax deductible to our estate; tax or financial advisors can assist with identifying the assets that will be most beneficial to receive favorable tax treatment through these gifts.
Some methods of charitable giving via an estate plan can lower our tax liability while we are still alive. One example is a Charitable Remainder Trust. This type of trust will distribute money to the trust’s beneficiary during that beneficiary’s life, or for a specific term of time. When the term of the trust is done, the remaining assets are paid out to the qualified charity of your choice. When this trust is created, the act of transferring assets to it can sometimes include a present-day charitable income tax deduction. Unlike other charitable donations, this method allows us to keep a benefit to ourselves or a loved one for our lives, while benefiting a meaningful cause at a later time.
If living a life of service or supporting a charity is important to you, consider learning more about charitable giving through your estate plan. There are opportunities to both provide for your loved ones and pass on significant gifts to charities. Many estate planning tools for charitable giving can be used either during life or as a “testamentary” gift, meaning the gift will be made after death as directed by the estate planning documents.
Tools like the Charitable Remainder Trust do not provide the same benefit to every family, but when used properly in an estate plan crafted by a qualified attorney, can provide a significant benefit to everyone involved. The charitable planning process facilitates our most important goals: supporting important causes and caring for our loved ones. Contact an estate planning attorney to learn more.