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Friday, May 28, 2021

The Benefits of Charitable Giving in Your Estate Plan

Giving back to causes that are important to you may be a priority. If there are charities whose mission you support, providing them with financial resources to continue pursuing their goals can be fulfilling in so many ways. In addition to bringing you joy and a feeling that you are contributing something bigger than yourself, there can be other benefits of charitable giving. These benefits, however, can vary depending on how you do the giving. For instance, have you ever heard of charitable giving through an estate plan? By using different estate planning tools as mechanisms for charitable giving, you can give back to a beloved cause and reap other benefits as well. We will talk more about those benefits here.

The Benefits of Charitable Giving in Your Estate Plan

Making a gift directly to a charity during your lifetime can be deeply satisfying. It really does feel good to give back. On top of the feel-good benefit of charitable giving, you are also eligible to itemize deductions for your charitable contributions. The tax structure itself supports charitable giving, which is great and can act as a further incentive to support the charities of your choice.

On top of giving directly to a charity during your lifetime, there are other ways to give and that can provide benefits. You can work with your estate planning attorney to put tools in place to give back as part of your estate plan. Be sure to discuss these various options with them to see what fits your needs and goals best.

Trusts can be a great way to give to charity. A charitable lead trust is especially good for substantially appreciated assets, think real estate or stocks. You can put these assets into the charitable remainder trust and reduce your current capital gains tax liability. You can also structure the trust so that a current portion of the value of the assets held in the trust goes to the charity and also generate a payout from the trust for yourself or another during your lifetime or a set period of time. If the charitable lead trust is funded during your lifetime, the value of the remainder gift to the trust beneficiaries will be a taxable gift. If the trust is funded during your lifetime, it will be subject to the estate tax.

You may also want to consider using your retirement accounts in your charitable giving through your estate plan. Retirement accounts can be among the highest taxed assets of an estate. This makes retirement accounts a good choice for charitable bequests. Leaving retirement account proceeds to a charity can help increase the impact of your giving. This is because the charity can avoid paying income taxes on your retirement account bequest. Furthermore, your retirement account passing directly to charity also may provide a reduction in the estate tax burden carried by your family. This is because the retirement asset passing directly to the charity would make your estate eligible for a federal estate tax charitable deduction of the retirement account’s value.

Estate Planning Attorney

Do you have more questions about what your estate plan can accomplish for you and the things that you care about such as charitable giving? Learn more about your options from the knowledgeable team at Monk Law. Contact Monk Law today.


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