Charitable Giving and Your Estate Plan: What to Know

  • Posted on: Dec 18 2020
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For many people, charitable giving is a normal part of life. But for others, charitable giving is also a part of their death. Many people choose to donate to charity when they pass away by implementing charitable giving into their estate plan to support the cause or causes they care about the most.

You can incorporate charitable giving into your estate plan in various ways:

1. Through Your Will

The first way in which you can incorporate charitable giving into your estate plan is through your will. Not only does giving to a charity make a big difference for the charity, but in doing so you can also help your loved ones. Since charitable contributions in your estate plan can help to decrease your estate taxes, this will ensure that the final value of your estate will be maximized. Just be sure that your donation is properly described in your will. 

2. Through Your Retirement Account

While it may seem a bit odd, you can actually donate to a charity by naming the charity as the beneficiary of your retirement account. Plus, since charities are exempt from both estate and income taxes, they will receive the entire value of the account once it is liquidated upon your death. 

3. Through a Charitable Trust

Another way in which you can leverage your estate plan to donate to charity is through a charitable trust. For example, a split-interest trust lets you give your assets to a charity of your choosing but to also keep some of the benefits associated with holding onto those same assets. For your good deed you receive a tax deduction whenever you transfer money into the trust. As a donor you have continued control over the assets in the trust until you pass away. 

Since there are many different ways in which you can donate to a charity, it’s important that you select the method that is most beneficial to you and your loved ones. It’s also imperative that you ensure that your assets go to the right place and will be used as you wish.

As of now you can donate up to $11.58 million to others ($23.16 million per married couple) during your lifetime without having to pay any federal gift taxes. Be aware that the amount of gift tax exemptions that you use throughout your life will decrease your federal estate tax exemptions. Come 2025, these numbers will drop to $5 million and $10 million respectively for inflation unless these numbers are renewed prior. 

The Law Offices of Brian L. Fox, APLC Help those who Wish to Incorporate Charitable Giving into Their Estate Plan

There are many different ways in which you can choose to participate in charitable giving through your estate plan. Because of this, it’s important that you choose what’s best for your situation and your goals. This is why it’s in your best interest to consult with a knowledgeable and experienced California Estate Planning and Probate attorney. 

At the Law Offices of Brian L. Fox, APLC, we know how important it is to protect what – and whom – you care about. We will help you to build an estate plan that meets your needs. To learn more or to schedule a free consultation, contact us today!

Posted in: Estate Planning