Charitable Giving Through Estate Planning: Leaving a Legacy of Philanthropy

Estate planning is all about leaving a legacy – allowing you to provide for the people and causes most important to you even after you’re gone. Having this plan in place now can give you much-needed peace of mind and also means you can explore different options for how you want to structure your estate to achieve the greatest possible positive impact. 

It’s best to work with an experienced estate planning attorney to ensure you understand all the legal complexities, tax benefits, and pros and cons of the various approaches you can take, but the following is a brief description of some of the most common methods of incorporating charitable giving into your estate plan.

Charitable Trusts

Setting up a charitable trust is a great way to provide for both your non-charitable beneficiaries (i.e., your family) as well as for the charity or charities of your choice. The most common type of charitable trust is a charitable remainder trust.

With this type of trust, you would transfer assets into an irrevocable trust that would pay income to your heirs for their lifetime or a designated number of years up to 20 years. After the death of the beneficiary (or the end of the term of years), the remainder of the assets in the trust would be donated to charity.

There are different types of charitable trusts that vary in the amount and the ways in which the principal is distributed. The type you choose will affect the relevant taxes (e.g., estate, gift, generation skipping, and income taxes), so it’s always a good idea to check with your financial advisor and an estate planning expert to accomplish your philanthropic goals while also reducing any negative tax impacts on your non-charitable beneficiaries.

Outright Gifts

One of the simplest ways to support the organizations you care about is by designating assets such as cash, stocks, or proceeds from the sale of property to be given directly to charity as part of your will. Some of the benefits of this option are that the gift can have an immediate impact while also providing some flexibility to you to make changes throughout your life, unlike with a charitable trust, which is irrevocable.

Donor-Advised Funds

If you are interested in a more long-term option, many people choose to establish a donor-advised fund for their charitable giving. Working with a public charitable organization, you contribute assets to set up a tax-free investment fund. With this option, you receive tax benefits immediately while also having the freedom to make recommendations for how the fund will be used to support causes important to you. The funds continue to grow tax-free, which means your contribution can have a significant impact over a longer period of time. 

Ready to Get Started?

The estate planning group at Lonich Patton Ehrlich Policastri has significant expertise when it comes to preparing trusts and other estate planning documents related to transferring wealth and charitable giving options. Call us today at (408) 553-0801 to set up a free, no-obligation consultation to discuss your long-term philanthropic goals. We can help protect your family’s future while also establishing your legacy of philanthropy.  

Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.