When looking into charitable giving, it can easily become overwhelming. Talking to an experienced estate planning attorney can help make this a simple part of your estate planning that you feel great about.
The Press & Guide’s recent article, “Estate planning and charitable giving,” explains that there are a number of ways to incorporate charitable giving into an estate plan. It is something that almost anyone can do. Let’s look at some common ways to give:
Giving in your will or living trust. When hearing about charitable giving and estate planning, many people may get intimidated by estate taxes. They think their heirs will not get as much of their money as they wanted. However, including a charitable contribution in your estate plan will reduce your estate tax liabilities—helping to maximize the final value of your estate for your heirs. Talk to your estate attorney and ensure that your donation is detailed properly in your will or trust.
Donating your retirement account. Many people don’t realize this, but you can name a charity as the beneficiary on your IRA or 401k. Charities are exempt from both income and estate taxes, so going this route means the charity will receive 100% of the account’s value when it’s liquidated. That is a great way to preserve the full value of the gift of the retirement account, because of the taxes that won’t have to be paid.
Creating a charitable trust. A charitable trust is another way to give back through estate planning. You can ask your attorney about a split-interest trust such as a charitable remainder trust, which allows a person to donate their assets to a charity, but keep a stream of income from those assets during lifetime as well as get a current tax deduction based on the assets that will ultimately pass to charitable beneficiaries.
Charitable giving is an important component of many people’s estate plan. There are several options, so speak to an experienced estate planning attorney to help you select the best one for you, your family and the charities you want to support.
Reference: (Southgate MI) Press & Guide (January 27, 2019) “Estate planning and charitable giving”