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Benefits of Charitable Gifts in Your Estate Plan

When you are making your estate plan it is natural to think first about your family members as heirs, so that they are taken care of in the future.  However, there are many benefits of including your favorite charities in your will or trust, that won’t compromise the interests of your heirs.  Here is an overview of some if the benefits of charitable giving through your estate plan.

Charitable Causes with Your Legacy – Naturally, the primary benefit of charitable giving is the knowledge is that a portion of your estate will be supporting a meaningful cause.  While we value leaving assets to family members, there is a real social benefit when we name a charity as part of our legacy. In addition, many charities do recognize charitable gifts if you inform them while you are still alive.  They may publicize significant gifts with your permission, and may even have naming opportunities in their facility to recognize your generosity.

A Wide Variety of Gifting Strategies Are Available – There are many ways to include charitable gifts in your estate plan, and you will need to work closely with your attorney to select the optimal strategy for your estate.

  • Gifts in Your Will or Trust: this is most simple approach and will list the charity as one of your designated heirs.
  • Charitable Gift Annuities:  a lifetime cash gift is used to purchase an annuity, paying the donor income with the remainder transferred to the charity upon death.
  • Charitable Remainder Trusts:  Similar to a CGA, the irrevocable trust is tax-exempt, grants income to beneficiaries with the remainder going to the charity.
  • Gifts of Appreciated Assets: either directly or in a trust, offering tax advantages for the donor.
  • Family Foundations: A family foundation can be established which can be managed after death to support one or more charities.

These are only brief descriptions, and future articles will go into more depth for some of these gifting options.

Tax Savings – Depending on the size of your estate and type of assets, there can be tax advantages if you make either lifetime or estate gifts to a charity.  In some cases, this can actually increase the amount that your heirs receive if some estate or capital gains taxes can be avoided. Many of the gift types listed have tax benefits for your estate and/or heirs.  Your estate planning attorney can assist you in both tax and income strategies for charitable gifts.

Setting an Example for Younger Family Members – One intangible benefit of charitable gifts is that younger family members may follow your example someday.  Rather than resent a portion of their inheritance going to a charity, they may actually be inspired by your generosity and will want to become donors, volunteers or to make their legacy gift in the future.

No Gift is Too Small –  The other benefit of charitable gifts in your estate plan is that there is no minimum amount required and it is virtually cost-free.  Some donors may opt to give some percentage of the estate, a piece of appreciated property or a fixed dollar amount.  The real advantage of charitable giving is that it is a selfless act and can be customized to fit within your estate plan and final wishes.

Written by Andrea Shoup

Shoup Legal, A Professional Law Corporation can be reached at (951) 445-4114.

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