When creating your estate plan, you need to think about who you want your beneficiaries to be and how you will divide your assets. Of course, when thinking about your beneficiaries, it is likely that family and friends will come to mind first. However, consider adding a charity as a beneficiary to ensure that the tradition of giving continues after your death. While many might not consider giving to a charity in their estate plan, it is a great way to give back. In fact, many people decide to give a portion of their estate to a church, food bank, or medical research. If you are considering including charitable giving into your estate plan, you may not know where to start. Keep reading for a look at answers to some of the most frequently asked questions we receive about charitable giving.
What Charity Should I Donate To?
While including charitable giving in your estate plan may sound appealing, you may find yourself wondering what charity to choose. While this may be an easy decision if there is an organization you have worked closely with over the years, you are not alone if you are new to charitable giving. If you do not have much philanthropic experience, take some time to think about where your passions lie. For instance, is there an issue in your community that concerns you? Is there a particular illness you wish had better research funding? Is there an organization that helped you when you were in a difficult place? Considering these questions can help you to decide where you want to give back.
The great thing is that you don't necessarily have to limit your donation to a single charity. However, before you incorporate charitable giving into your estate plan, research potential charities. Thus, ensuring that they are legitimate and that you know exactly what your donation will be funding.
Should I Include My Family in the Decision Process?
Unless you have a specific charity in mind, involve your family in the decision-making process. Call a family meeting to discuss the fact that you'd like to include charitable giving into your estate plan. Explain why charitable giving is important to you, and ask for input on what charity your loved ones. Doing so can have multiple benefits in addition to helping you make this important decision.
Having this discussion prepares your loved ones for your plan to give a portion of your estate to charity. Thus, reducing their potential inheritance. However, including your family in the decision process will prevent this from coming as a surprise later on, and being involved in choosing a charity can give them a sense of fulfillment at having been part of the family's philanthropic endeavors. This may even get your beneficiaries thinking about their own charitable giving and whether they should consider continuing the family legacy you started by giving to the same charity in their estate plans.
Financial Benefits of Charitable Giving?
You may find yourself wondering if there are any financial benefits to including charitable giving. After all, if you donated to a charity while you were still alive, you would likely receive some kind of tax benefits. Similarly, including charitable giving into your estate plan can have tax benefits by decreasing your estate's tax liabilities. This can actually help you to maximize the final value of your estate for your family. However, it is important to remember that certain types of donations provide more advantageous tax benefits than others, so it can be helpful to work with an experienced estate planning attorney who can help you find the best way to incorporate charitable giving into your estate plan.
How Do I Incorporate Charitable Giving Into My Estate Plan?
Once you decide on a charity (or charities) that you would like to include in your estate plan, you may find yourself wondering how you would include charitable giving in your estate plan. How can you ensure that a portion of your estate goes to your desired charity after you are gone? The fact is that there are several options for including charitable giving into an estate plan. Here is a look at just a few of the most popular options.
Gift Through a Will or Trust
A simple way to give to a charity at death is to name them as a beneficiary in your will. This can either be in the form of cash or physical assets such as real estate, vehicles, or art. Naming a charity as a beneficiary reduces the value of your estate, which reduces your estate tax bill (when applicable). Just like any other asset in your estate, you can stipulate in your estate plan how and when designated assets are distributed to charities, and your trustee or executor will be responsible for overseeing this process.
Donate Your Retirement Account
Another great way to give to charity in your estate plan would be to designate your preferred charity as the beneficiary for your retirement plan. The fact is that retirement accounts are some of the highest-taxed assets in any estate. This makes them a great option for charitable giving, as charities do not have to pay taxes on these gifts. Giving to charity is then a great use for your retirement plan after your death, as not only will this money likely avoid being taxed, but your estate may also receive a tax deduction for this gift.
Create a Family Foundation
For those who want to donate substantial funds to ongoing charity work, create a family foundation. Set up a foundation during your life and oversee various charitable works. Have your family continue to support the foundation after your death. This is a great way to create a family legacy that bears your name for generations to come.
Learn More About Charitable Giving in an Estate Plan
Given that there are a variety of ways in which you can include philanthropic giving into your estate plan, you may feel overwhelmed trying to decide what option will work best for your family. This is where it can be advantageous to partner with an estate planning attorney who can help walk you through your options. An experienced attorney helps you decide the best way to donate based on what you are hoping to achieve.
Feel free to contact us to learn more about incorporating charitable giving into your estate plan.
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