Ways to Incorporate Philanthropy into Your Estate Plan

Using philanthropy in estate planning allows many Americans to lower their tax burden during their lifetime, reduce their heirs’ tax exposure upon their death, and support worthy causes now and in the future.

Accomplishing all those estate-planning goals is possible with the guidance and knowledge of an experienced attorney from Palmer Rodak & Associates.

Benefits of Charitable Gifts

Philanthropic giving through estate planning provides many benefits like tax management, asset reallocation, and generational transfer of wealth.

Your contribution to a special charity, school, church, or service organization can make a lasting difference in all the lives they touch. For many Americans, creating a legacy that impacts generations to come is possible. Wills and trusts are available to serve this purpose.

Using Your Will to Donate to Causes

You can use a will to specify what happens to your assets upon death. Designations can include charitable bequests and establish trust funds for charities. Naming a charity as the beneficiary can lower the amount of your taxable estate and any estate taxes.

Using Trusts in Charitable Giving

Trusts help surviving members of your family and benefit you as well. Your trust is a legal document created between the trustee and the grantor. The grantor creates the trust, and the trustee manages the trust assets in accordance with the grantor’s wishes.

A trust can include many types of financial holdings such as the following:

  • Stocks
  • Bonds
  • Annuities
  • Money market accounts
  • Real estate
  • Art

There are multiple types of trusts. Our attorneys can advise you on the correct trust for your goals.

A charitable trust allows you to designate certain assets to be allocated to a specific charity and the remainder of the distributed assets go to the beneficiaries of the trust. A charitable trust offers control over intended charitable beneficiaries, estate planning, lifetime income for you, and tax management.

A charitable remainder trust is an irrevocable trust that includes income for you for a specific number of years. Upon your death, one or more charities receive the assets that remain.

A charitable remainder annuity trust distributes a fixed annuity amount each year and additional contributions are not allowed. This trust pays the beneficiaries during your lifetime and transfers the balance of the trust to a designated charity after your death or the last designated beneficiary dies.

A charitable remainder unitrust irrevocably transfers assets to a trustee who then invests the assets. The proceeds pay an annual variable income to you and other beneficiaries. In certain charitable plans, such as a school, the trust is tax exempt and is not subject to capital gains tax when the assets are sold.

Retirement Accounts for Charitable Gifts

Leaving IRA retirement assets for a charity helps the organization in two ways. The charity receives the contribution, and it does not have to pay income taxes on the donation. The estate tax burden on your family is also reduced. Because the asset passes directly to the charitable organization, the estate qualifies for a federal estate tax charitable deduction.

Creative Philanthropy Comes in Many Forms

Philanthropic donors can bequeath life insurance policy payouts, investment assets, and physical property such as buildings and vehicles. At Palmer Rodak & Associates, we have deep and focused knowledge to help clients use creative ways to support their charities.

Schedule a consultation to learn how estate planning can support your philanthropic and tax goals. Your initial consultation is at no cost. Contact us online or call (760) 573-2223 to get started.