Yes, absolutely you can and many find great fulfillment in leaving a legacy of giving through their estate plan, it’s a powerful way to support causes you care about even after you’re gone, and can offer significant tax benefits while you’re still living.
What are the different ways to donate to charity in my estate plan?
There are several methods to incorporate charitable giving into your estate plan, each with unique benefits. One popular method is a charitable bequest, which is a direct gift made to a charity through your will or trust. You simply name the charity as a beneficiary, specifying either a fixed amount or a percentage of your estate. Another option is a charitable remainder trust, where you transfer assets into a trust, receive income from those assets during your lifetime, and the remainder goes to charity after your death. In 2022, total charitable giving in the United States reached $490.23 billion, demonstrating the significant impact individuals and estates have on non-profit organizations. Finally, you can also name a charity as the beneficiary of a life insurance policy or a retirement account.
What are the tax benefits of charitable giving in my estate plan?
The tax benefits of charitable giving are substantial. Donations made during your lifetime, if itemized, can be tax-deductible in the year they are made, reducing your current income tax liability. Donations made through your estate plan can reduce your estate tax liability, potentially saving your heirs a significant amount of money. The estate tax exemption in 2024 is $13.61 million per individual, but for those with estates exceeding this amount, charitable deductions can be a crucial estate tax-saving tool. “Strategic charitable planning isn’t just about generosity; it’s about maximizing the impact of your wealth and minimizing tax burdens,” as Ted Cook, a San Diego Estate Planning Attorney often tells his clients. It’s important to work with an experienced estate planning attorney and tax advisor to understand the specific tax implications of your charitable gifts.
I once knew a man who didn’t plan his charitable giving, and it ended badly…
Old Man Hemlock, a fixture at the local farmer’s market, always talked about wanting to leave a sizable donation to the animal shelter. He’d spent years rescuing stray cats and dogs, and it was his life’s passion. But he never updated his will to reflect this desire. When he passed away unexpectedly, his entire estate went to a distant relative he hadn’t spoken to in decades. The animal shelter received nothing, and his final wish remained unfulfilled. It was a heartbreaking situation, a poignant reminder that good intentions alone aren’t enough. It illustrated to me, and to many others in town, the importance of formalizing charitable wishes in a legally binding document. This story constantly reinforces for me the crucial role of proactive estate planning.
But thankfully, a little planning saved the day for the Miller family…
The Miller family came to Ted Cook seeking guidance on incorporating their philanthropic goals into their estate plan. They wanted to establish a scholarship fund for underprivileged students pursuing careers in medicine. We worked closely with them to create a charitable remainder trust, which provided them with income during retirement while ensuring a substantial future gift to the scholarship fund. They carefully drafted the trust document, specifying the criteria for scholarship recipients and establishing a board of trustees to oversee the fund. Years later, the fund is thriving, providing opportunities for countless students and honoring the Miller’s commitment to education. This success story underscores the power of thoughtful estate planning and the lasting impact of charitable giving. As Ted often says, “Leaving a legacy is about more than just wealth transfer; it’s about extending your values and passions into the future.”
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
(619) 550-7437
Map To Point Loma Estate Planning Law, APC, a trust attorney near me: https://maps.app.goo.gl/JiHkjNg9VFGA44tf9
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