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Consider Charitable Giving in Your Estate Plan

Planned giving is one way to leave a good legacy.

You can use your estate plan to make planned charitable gifts, according to the Nashua Telegraph in "Planning to give and leaving a lasting legacy."

Planned giving is simply about making provisions in your estate plan that a certain amount of money, or a percentage of your estate's assets, should be given to charity.  It is popular not only with wealthy individuals, but also with people of more modest means who want to leave something behind for good causes.

There are several different ways that you can make charitable donations a significant part of your estate plan. Some are as simple as a few lines written into your Will, and others are both more complicated and more beneficial to both you and the charity(ies). 

An experienced estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and that may include planned charitable giving.

Reference: Nashua Telegraph (May 20, 2018) "Planning to give and leaving a lasting legacy."

What Is Best Way to Leave Assets to Charity?

There are good ways and bad ways to give to charities. It often depends on the charity.

People often decide to leave some or all of their assets to charity.  However, the best way to find out how to give to any specific charity is to talk to that charity, according to Mountain Xpress in "Local nonprofits work with donors for planned giving."

Many charities have specific language they like donors to use when giving gifts in their wills or trusts. This helps the charity know how they can use the gifts legally. Donors can also benefit from this since the charity might have different funds set up for its different charitable activities, and Donors can direct that their gifts be used for the specific funds that they choose to support.

Some charities even offer “benefits” to people who promise to make a gift to the charity after they pass away. However, if you do not let the charity know about your plans, then you cannot get those benefits.

An experienced estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and that may include leaving something behind for charity.

Reference: Mountain Xpress (May 12, 2018) "Local nonprofits work with donors for planned giving."

Charities Would Feel Impact of an Estate Tax Repeal

There is a close relationship between the estate tax and charities.

The estate tax and charities are closely linked, according to Bloomberg in "GOP Plan to Kill Estate Tax Sets Up Charitable Giving Conflict."

The issue is that one of the most common ways to get around the estate tax is to shrink an estate to just below the estate tax exemption limit, and a great way to do this is to give money to charity.

When the estate tax was temporarily eliminated in 2010, charitable giving was reduced by 37%.  This has many charities very nervous about the possibility that the estate tax could be eliminated again.

 

With or without the estate tax, an experienced estate planning attorney can advise you on an estate plan that fits your unique circumstances.

Reference: Bloomberg (Aug. 25, 2017) "GOP Plan to Kill Estate Tax Sets Up Charitable Giving Conflict."

New Policies Could Have Impact on Charitable Giving

There could be a big impact on charitable giving.

Bloomberg took a close look at what impact may occur if President-elect Trump follows through on some of his campaign statements in "Where Charitable Giving May Head With Trump."

Trump has stated that he will increase GDP growth by 4% per year, which would likely lead to more charitable giving. However, many economists doubt he will be able to fulfill that promise due to economic and demographic circumstances beyond his control.

The President-elect campaigned on cutting taxes, especially on the wealthy.  This would also likely increase giving to charity. However, his nominee for Treasury Secretary has cast some doubt on those tax cuts, by recently stating that any cuts on the wealthy will be offset by reducing deductions.

Trump has also expressed a desire to eliminate the Federal Estate Tax, which could actually reduce some charitable giving (at least when the impetus for the giving is to reduce the value of an Estate).

Only time will be able to clear up some of this uncertainty with respect to Trump's policies.

Reference: Bloomberg (Nov. 27, 2016) "Where Charitable Giving May Head With Trump."

Plan Ahead If You Want a Charitable Legacy

An estate plan can put you on the path of being remembered for charitable giving.

If you want to be remembered for being a charitable benefactor, you need to get started and an estate plan is a good beginning, according to the Port Huron Times Herald explains in "Plan today to make a difference tomorrow."

Having a true charitable legacy requires a lot of work and forethought.

With a well-designed estate plan, you can set up your charitable giving to be ongoing after you pass away.  If you want, you can leave one time gifts in your plan but also create new legal entities that will continue to give to charities indefinitely.  You can even dictate which charities these entities will give to and for what purposes.  The entities can be relatively simple trusts or they can be complex family foundations.

Without proper planning, however, creating a charitable legacy is virtually impossible, and attempts to do so can easily fail to comply with applicable laws and IRS regulations.

A qualified estate planning attorney can advise you about creating a plan that will achieve all of your goals.

Reference: Port Huron Times Herald (Nov. 25, 2016) "Plan today to make a difference tomorrow."