Giving a charitable contribution is a method used for making donations to philanthropic or charitable establishments before or after you die. Giving to charities is often utilized to lessen the total amount of estate taxes that your estate will have to shell out. Most gifts to charities are 100% deductible from your estate taxes. Thus, giving charitable donations can be a crucial tool for incorporating tax savings on your estate.
There are several different ways to achieve making charitable donations. The most common way to give to charities is by simply making a donation or gift to the charity of your choosing in your trust or will. People can donate stocks, bonds, cash, real property, or even a specific percentage of their total estates. For instance, an outright donation can be made by simply adding “I give the sum of $25,000 to the American Red Cross, a non-profit charity” to your will.
Using a Revocable Living Trust
The most practical way to give a charitable donation is by using a trust. Revocable living trusts can easily be established for any bequests to charities. After, the remainder of your estate can be divided and distributed between your beneficiaries. Using a trust allows donors to preserve control over their assets and property while they are still alive. In case your situation changes and you decide to modify your charitable donations or eliminate them completely, revocable living trusts can be amended with little difficulty. Additionally, a revocable living trust would not have to go through the probate process and your donation can typically be distributed much faster than if you used a will instead.
Charitable Remainder and Charitable Lead Trusts
There are also other much more complicated techniques to donate to charitable organizations. Certain types of irrevocable trusts can be applied to give charities deferred benefits. For instance, a Charitable Remainder Trust (CRT) is an irrevocable trust where assets are placed to provide yourself with a source of income for a specific length of time. When the time period ends, the assets that were transferred into the trust will be donated to your choice of charities. However, since a CRT is an irrevocable trust, the donor forfeits their rights to control the assets in the trust. The benefits of a CRT include a reliable source of income and lower estate or gift taxes.
A Charitable Lead Trust (CLT) is established to pay income to a charitable organization for a certain period of time. Then, when the time ends or when you die, the assets are distributed among your beneficiaries.
The main thing to take into consideration is that without a trust, will, or irrevocable charitable trust, charitable organizations of your choosing may not receive the assets you desire them to. In cases where an estate goes through probate, due to a lack of an estate plan, the court will have no way of knowing about your charitable donation wishes.
Let Us Help You Today
A knowledgeable and experienced Walnut Creek estate planning attorney can help you in creating your personalized estate plan. You can count on our qualified team to sensibly develop a custom-built plan for your needs. Contact us online or call now at (925) 208-4543 to discuss your estate plan or charitable donations further with Feldman Law Group.
Resources:
oag.ca.gov/sites/all/files/agweb/pdfs/charities/publications/CharitiesSolicitation.pdf
barrons.com/articles/the-charms-and-dangers-of-the-charitable-remainder-trust-1506133624