Why is Charitable Gift Planning an Important Part of Estate Planning?
Charitable planning done with the help of a skilled attorney can help reduce the amount of tax you pay on your income during your life through planned deductible gifts. Estate planning using charitable gift structures may also reduce gift and estate taxes. Charitable giving may also reduce capital gains paid by your estate when you donate real estate, stock or other property that has appreciated significantly.
Philanthropy should be a key component of estate planning. Planned giving provides an opportunity to balance the desire to provide for your family and other heirs along with a desire to contribute to your favorite charities or institutions. It is an invaluable estate planning tool to help manage taxes while making a difference for the future. Charitable giving also establishes a legacy of giving that may inspire your heirs and others to continue.
Important to Consider:
How KJK Helps Individuals Optimize Their Charitable Gift Giving
You want your contributions to do the most good for those organizations receiving them, and you want to take advantage of the available tax breaks for charitable giving. At KJK, our experienced team of Estate Planning attorneys can help guide you in creating favorable gift structures to suit your unique needs.
A bargain sale can be made to a charity, institution or organization, allowing you to make a substantial contribution to charity while getting some of the value of the property back. Bargain sales happen when you sell the property to a charity for below the fair market value.
A bargain sale might be the right choice for donors who want to donate specific property but can’t sacrifice the property’s full value. A bargain sale can allow you to help a worthy cause while still providing you with some of the property’s value and significant tax savings.
KJK’s Estate Planning attorneys can help negotiate the sale agreement between you and the purchasing charity or institution, reach the final sales price and complete the transaction in an efficient manner that protects both the donor and the recipient.
Charitable Gift Annuity
Charitable gift annuities start with a contract between the donor and the recipient organization. In return for your gift, the recipient organization agrees to pay you a fixed amount for the rest of your life. You make a one-time gift and receive a fixed amount of income for life.
There are numerous tax advantages to a charitable gift annuity. A portion of your contribution can be claimed as a tax deduction, thereby reducing your tax burden. Part of the income you receive from the annuity each year will be tax-free. Charitable gift annuities funded with assets that have appreciated over time can also substantially reduce the burden of future capital gains taxes.
Charitable Lead and Remainder Trust
A charitable remainder trust (CRT) is another tool that helps you convert assets that have appreciated substantially into a lifetime stream of income. It serves the dual purpose of reducing income taxes now and can be structured to reduce estate and capital gains taxes when you die.
A charitable remainder trust involves transferring appreciated assets into an irrevocable trust which removes the assets from your estate. You receive a charitable income tax deduction for the donation, and the Trustee of the CRT can then sell the assets at fair market value. The sale proceeds are then reinvested in a manner agreed upon beforehand, usually in publicly traded investments. The investment proceeds are used by the CRT to pay you an income stream for life.. After your death, the CRT’s remaining assets go to the charity or organization you have designated.
If a CRT is not the right option for your needs, you may benefit from a charitable gift structure known as a charitable lead trust (CLT). A charitable lead trust is an irrevocable trust established to provide income to a charitable organization for an established number of years. Once the pre-determined number of years have passed, the remainder of the assets passes to the donor’s beneficiaries.
Contact KJK’s Estate Planning attorneys to learn more about CRT and CLT options and whether they are charitable gift structures that will benefit your estate plan.
Direct Charitable Gifts
Direct charitable gifts can benefit the charity of your choice as a bequest in your will or revocable trust. Your will or trust will list specific charities and the amount you wish to bequeath each one. You can also choose to leave your bequest for general use by the charity, or you can specify or restrict how you want the charitable bequest to be used for by the charity.
You can also make direct charitable gifts during your lifetime. Making lifetime charitable donations as part of well thought out plan, can reduce the amount of income tax you pay and further lower your estate taxes by removing the money or assets from your estate.
We’re Here for you:
Let KJK’s Estate Planning Team Help You Make the Most of Your Charitable Gifts
There are numerous charitable gift structures and strategies to help you achieve the philanthropic legacy you want to create. Let our team of legal professionals help you explore charitable gift-giving strategies so that you, your beneficiaries and the charities you care about receive the maximum benefit from your gift.
Contact KJK’s Estate Planning attorneys for a consultation about your goals for charitable giving.