For many, giving back to organizations and charities they hold near and dear to their hearts is incredibly important. Whether they at one time relied on the assistance of the organization or the charity aligns with their values and beliefs, financial support is something many prioritize. As such, understanding how charitable planning works and the benefits is critical if meeting with a Pasco County, FL estate planning lawyer. The following blog covers the basics of what you should know about charitable planning as part of your estate plan.
What Is Charitable Planning?
Charitable planning is a way to donate assets like cash or property to a qualified organization. It’s important to note that this is strictly a philanthropic transaction and that the donor doesn’t receive anything in return from the charity for their donation. There are, however, indirect benefits to donating.
Many people use this to give back when estate planning. Whether they could not afford to during their lifetime or want to leave a lasting legacy upon their passing, this allows heads of estates to leave a portion of their assets to charity.
Before donating, it’s essential to understand that the organization or charity must be IRS-approved as tax-exempt in order to reap the full benefits of gifting assets and funds.
What Are the Benefits?
Making charitable donations via a trust to qualified organizations has many indirect benefits to help incentivize people to give back to their community. Not only does it help create a legacy of philanthropy and allow the organization to continue, but there are also tax benefits for those who give back.
One of the primary benefits of charitable planning is that it can reduce your income tax, allowing you the opportunity to donate more assets to the charity. Additionally, by putting assets in a charitable trust, they can appreciate in value without enduring the capital gains tax. Similarly, the assets in these trusts will likely avoid the probate process and will not endure gift taxes associated with gifting assets.
What Options Do I Have?
Most commonly, those looking to donate will either use a charitable lead trust or a charitable remainder trust. A charitable lead trust allows you to make transfers from the trust to an organization for a predetermined amount of time. Once the time is up, the remainder of the assets will go to your beneficiaries. A charitable remainder trust works in the opposite – your beneficiaries are at the front of the line for assets and whatever remains goes to the charity of your choosing.
It’s important to note there are additional, less common options when planning an estate. As such, it’s in your best interest to consult an experienced attorney from the Law Offices of Matthew J. Jowanna to discuss your choices to make an informed decision about what’s best for your circumstances. Contact our team today to speak with an experienced estate planning attorney about your charitable planning options.
