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Working Philanthropy Into Your Estate Plan

 

Charitable gifts can be part of your estate plan. Not only do they offer you the ability to continue giving long after death, but they can provide considerable tax advantages as well.

Philanthropy is a deeply personal endeavor that you want honored after your death. It's best to consult with an experienced estate planning attorney about the best way to accomplish this.

Philanthropic giving can create an opportunity to balance the obligation of providing for your heirs with your interest in contributing to the future of a favorite organization or institution. As an estate planning tool, charitable gifts can be used to manage taxes, shift assets and transfer wealth intergenerationally, while simultaneously making a significant contribution to a charitable organization.

Surprisingly, your will may not be the best mechanism for making charitable gifts. Why?

  • When you bequeath a gift in your will, you lose all control over the asset once the gift has been made. If you gift $10,000 to a beneficiary in your will, you have no say regarding how the money is spent once the gift is complete. While this may not be a concern when gifting to a family member and loved ones, it may very well be a concern when making philanthropic gifts.
  • Your will doesn't offer much in the way of flexibility or creativity. Your will doesn't allow you to combine charitable and noncharitable beneficiaries when making a gift, nor does it offer a way for you to include your legacy in the gift.

Conceptually, a gift to charity is the same as a gift to a loved one; however, charitable gifts are often treated differently than other gifts for tax purposes. Charitable gifts may actually lower your estate's exposure to federal gift and estate taxes and/or reduce your own personal income tax burden while you are alive.

If you are conscientious enough to consider philanthropy an important part of your daily life, chances are good that leaving behind a legacy is also important to you. Charitable gifting in your estate plan offers you a way to do just that. The charitable gifts you make in your estate plan may reflect the values, principles and beliefs that are all part of your legacy. Some common examples of charitable gifts that are part of a larger legacy plan include gifts made to:

  • Educational institutions.
  • Churches or other religious organizations.
  • Humanitarian aid organizations.
  • Animal rights groups.
  • Environmental groups.
  • Political parties.
  • Scientific organizations.

Many estate planning attorneys want to get to know their clients' situations, financial positions, goals and risk tolerance — even their dreams. This helps with the short- and long-term savings goals for charitable giving. Increasingly, clients express an interest in integrating charitable giving into their estate plans. So estate planning lawyers look at the potential tax benefits and the various channels through which a client can give. They'll discuss the benefits and considerations of charitable giving. Give us a call to discuss your situation.

 

 
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Santos, Postal & Company, P.C.
Santos, Postal & Company, P.C.
240-499-2040
bgreenfest@santospostal.com
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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