For many clients, philanthropy is already part of their everyday life. Whether it be involvement in one or more charitable organizations, or regular giving to religious or civic organizations. As we are approached to develop estate plans, many clients are surprised to learn of the many ways they can provide for longer and larger gifts and still retain control of the assets they need during their lifetimes.
If you are considering a bequest to a charitable organization, here are a few things to consider:
What May Not Work Best
While it is common for people to make charitable gifts in a Will, it may not be the best option. For starters, using your Will for charitable giving means you will most likely not be able to take advantage of the tax benefits that would otherwise be available. Additionally, once you make a bequest in your Will, you may lose control over how that gift is used. You may also want to involve your children, or other relatives, in your charitable plans, and that will likely require a more complex estate planning documents to accomplish.
Some Options
If a philanthropic legacy is one of your estate planning goals, here are some basic options to consider:
Charitable Trust – a charitable remainder trusts is a specialized irrevocable trust that allows you to gift to both to a charitable and non-charitable beneficiary. Charitable trusts can either provide to a charity for a specific period of time, with the remained to a non-charity beneficiary, or the reverse.
Charitable Gift Annuity – Similar to a charitable trust, a gift annuity begins with a donation of cash or other assets, and in return you (or a designated beneficiary), receives a fixed annuity payment for a designated period of time.
Private Foundation – A private foundation is a non-profit organization that manages funds used for charitable gifts to the causes it chooses. Those causes can be numerous and varied. Along with the tax advantages, creating a private foundation gives you the ability to involve future generations in your philanthropic plans. You create the foundation, establish guidelines for the type of gifts to be made, and define the beneficiaries. Your heirs then manage the charitable giving through the operation of the foundation. Because of the cost involved in setting up and operating a foundation, this option is only practical if you plan to donate a sizeable amount to charity in your estate plan or have a plan to generate additional funds in the future.
Takeaway
If charitable giving is part of your estate plan, understanding the tax and probate court rules can help you better achieve your goals. Depending of the amount you want to give, when and how you want it to be received, there are a variety of options. If you want more help meeting your charitable giving goals, Contact CASHMAN LAW today for a free consultation to see how we might help outline your options.
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