Make Your Mark: How Charitable Giving in Estate Planning Creates a Lasting Legacy
Legacy matters to all of us, and incorporating philanthropy as a part of your estate plan can go a long way in creating ripples of positive change in the world around you, while also adding a strong layer of respect and nobility to your own legacy.
Let’s dive into how charity works as a part of Estate Planning, and how it can benefit you.
What is Charitable Giving?
Charitable giving is when you set aside part of your estate to be given to a charity. This can be done two ways – specifying an organization you would like to donate to, or leaving it to the trustees of your will to decide. It’s also important to include the registered charity number if you are selecting a specific charity, to avoid confusion with any other organizations or in case of a name change. The donation you make can be money, a specific part of your estate, or a share of your actual or residuary estate.
Benefits of Incorporating Philanthropy Into Your Estate Plan
The benefits of philanthropy in your estate plan are several.
- Firstly, you will be leaving a positive legacy in terms of how you are remembered and the impact you have on the lives of your loved ones and strangers alike.
- Secondly, charitable giving is tax-deductible, which means it can reduce the overall tax payable on your estate by your heirs. You can find out the exact percentages of how much charity can reduce tax by during your meetings with our team.
- Last, but certainly not least, you will be helping the community by supporting those in need and making a meaningful difference.
The Challenges of Philanthropy
Before you turn your good intentions into charitable actions, it is recommended to consult with a legal expert for the following reasons:
- Estate laws differ based on your location and you must make decisions based on the laws that your estate plan is bound by.
- The charitable amount should ideally be in an acceptable ratio to the amount that your dependents or heirs are inheriting. This is to avoid conflict within the family, as well as reduce the possibility of your inheritors contesting your charity on the grounds of unfair distribution and your state of mind while creating the plan.
To ensure that you are aware of your state’s laws, that your dependents are receiving the right amount of inheritance, and that your wishes and legacy are protected, you can arrange an initial consultation with an estate planning expert at no cost.
What is a Charitable Remainder Trust (CRT)
A good strategic approach towards charitable giving, that will still ensure a lifetime stream of income for your loved ones, can be in the form of a Charitable Remainder Trust (CRT). A CRT is a “split-interest” trust, which means that it provides financial benefits to both the charity and a non-charitable beneficiary.
With CRTs, the non-charitable beneficiary—you, your child, spouse, or another heir—receives annual income from the trust. All of the assets that “remain” at the end of your lifetime (or a fixed period up to 20 years), pass to the named charity or charities. You can find more information about CRTs on our blog here.
You can also receive significant tax savings by naming your favorite charity as the beneficiary of your IRA, 401(k), or other retirement accounts.
If you are someone who is interested in giving back to society and your community, and doing your part in making this world a better place, feel free to reach out to us. Together, we can discuss a way to make the best of your noble intentions, while ensuring that your family’s future is secure and that they can also be a part of your charitable initiatives!
Contact us to get in touch and get your Estate Plan started!