A charitable gift in an estate plan is a powerful way to honor your values, interests, and beliefs while providing a lasting legacy for your loved ones. With careful planning and the help of a qualified attorney or financial planner, you can make a real difference in the world while also making sure your estate passes on to your heirs in the most efficient way possible.
Including charitable gifts in your estate plan can provide significant tax benefits. Donations to qualified charities are generally tax-deductible and can reduce both your estate tax liability and the amount of inheritance tax on your estate. Charitable giving can also help you support the causes that are important to you, giving you the satisfaction of knowing your legacy will continue long after you are gone.
When deciding how to incorporate charitable giving into your estate plan, there are several options you can consider.
One option is to simply leave a bequest in your will or living trust to a qualified charity. This is a simple way to make a significant contribution to a cause that matters to you without having to go through a complex estate plan.
Another option is to establish a charitable remainder trust. A charitable remainder trust is a tax-exempt trust that can provide lifetime income to you and/or your heirs, while allowing you to make a contribution to a charity of your choice.
You can also set up a charitable lead trust, which is similar to a charitable remainder trust, but the charity receives the payments first and your heirs receive the remainder. This can be a great way to provide financial support to a charity while also providing your heirs with a financial benefit.
Finally, you can designate a charity as a beneficiary of a life insurance policy or retirement account. When you name a charity as the beneficiary of a life insurance policy or retirement account, the proceeds from these accounts will go directly to the charity when you pass away, without being subject to estate or inheritance taxes.
Incorporating charitable giving into your estate plan can be a great way to make a lasting difference in the world while also ensuring that your estate is passed on to your heirs in the most efficient manner possible. With careful planning and the help of a qualified attorney or financial planner, you can make sure that your legacy will live on even after you are gone.
Dustin MacFarlane’s primary focus is on Elder Law and protecting families and seniors. He is a Certified Specialist in Estate Planning, Trust, and Probate Law by the State Bar of California Board of Specialization — a rare distinction.
Prior to becoming an attorney, Mr. MacFarlane worked in the Long Term Care industry. After becoming licensed to practice law in January of 2009, Elder Law quickly became his focus. Seeing the need during his former career, Mr. MacFarlane pursued Elder Law as a primary area of practice.