One way many people decide to give to charity, is to donate when they pass away. Adding charitable giving into an estate plan is great way to support a favorite cause.
When researching this approach, you can easily become overwhelmed by all of the tax laws and pitfalls that can make including charitable gifts in your estate plan seem more complex than it needs to be. Talk to an experienced estate planning attorney to help you do it correctly and in the best way for your specific situation.
West Virginia’s News explains in “Estate planning and charitable giving,” that there are several ways to incorporate charitable giving into an estate plan.
One way to give is to dictate giving in your will. When reading about charitable giving and estate planning, many people might begin to feel intimidated by estate taxes, feeling their heirs will not get as much of their money as they hoped. Including a charitable contribution in your estate plan will decrease your estate taxes. This helps to maximize the final value of your estate for your heirs. Speak with your estate planning attorney and make certain that your donation is properly detailed in your will.
Another way to leverage your estate plan to donate to charity, is to name the charity of your choice as the beneficiary on your retirement account. Charities are exempt from both income and estate taxes, so going with this option guarantees the charity will receive all of the account’s value, once it has been liquidated after your death.
You can also ask your estate planning attorney about a charitable trust. This type of trust is another vehicle by which you can give back through estate planning. For instance, a split-interest trust allows you to donate your assets to a charity but keep some of the benefits of holding those assets. A split-interest trust funds a trust in the charity’s name. You receive a tax deduction any time money is transferred into the trust.
However, note that the donors will continue to control the assets in the trust, which is passed onto the charity at the time of your death. You have several options for charitable trusts, so speak to an experienced estate planning attorney to select the best one for you.
Charitable giving is an important component of many people’s estate plans. Talk to your probate attorney about your options and go with the one that is most beneficial to you, your heirs and the charities you want to remember.
Reference: West Virginia’s News (Feb. 27, 2020) “Estate planning and charitable giving”