How to Include Charitable Gifts in Your Estate Plan
The holidays provide a perfect opportunity to review your estate planning and include charitable gifts in that plan. This will allow you to leave behind a legacy which reflects your values, and supports causes that you care about. If you have this goal in mind, the Indianapolis attorneys at Frank & Kraft offer suggestions on how to thoughtfully incorporate charitable giving into your estate plan. With that goal in mind, the Indianapolis attorneys at
Frank & Kraft
offer suggestions for how you can thoughtfully incorporate charitable giving into your estate plan.
Why Include Charitable Giving in Your Estate Plan?
Charitable gifts offer numerous benefits, such as supporting causes that align with your values, providing financial support to organizations, and potentially reducing your estate’s tax liability. For individuals with philanthropic goals, an estate plan provides an excellent opportunity to make a lasting impact while also simplifying and maximizing the distribution of your assets.
- Strategies for Incorporating Charitable GiftsIncorporating charitable gifts into your estate plan is an opportunity to create a legacy of generosity and positive impact. You can give to the causes you care about while providing for your family by thoughtfully planning your gift. Some popular ways to incorporate charitable gifts into your estate plan include:
- Direct Bequests in Your Will or Trust: One of the simplest ways to include charitable gifts is through a direct bequest in your Last Will and Testament or trust. You can specify the amount of money, a percentage or an asset to be donated. Including these instructions in your estate plan ensures the charity receives your gift without unnecessary complications.
- Create a Charitable Trust: Charitable trusts are powerful tools for structured giving that can be administered while you are alive and after you are gone. Two common types of charitable trusts that both offer tax advantages and flexibility in your giving strategy include:
- Charitable Remainder Trust (CRT): This trust allows you or your beneficiaries to receive income from the trust for a set period, with the remaining assets going to a designated charity.
- Charitable Lead Trust (CLT): This trust is essentially the same concept as a CRT but in reverse. A CLT provides income to a charity for a set term, with the remaining assets reverting to your heirs.
- Designate a Charity as a Beneficiary: You can name a charity as a beneficiary of specific accounts, such as life insurance policies, retirement accounts, or payable-on-death (POD) accounts. This approach bypasses probate, ensuring the charity receives the gift directly and efficiently.
- Donating Appreciated Assets: Donating appreciated assets, such as stocks or real estate, offers dual benefits. The charity receives the full value of the asset, and your estate avoids the capital gains taxes that would apply if the asset were sold.
- Establish a Donor-Advised Fund: A donor-advised fund (DAF) allows you to contribute to a charitable account during your lifetime, then recommend grants to specific charities either during your life or through your estate plan. This option provides flexibility and allows for ongoing philanthropic engagement.
Make Qualified Charitable Distributions (QCDs):
If you are 70 1/2 or older, you can make tax-free contributions directly from your IRA to a qualified charity. For more information, join us at an upcoming FREE seminar. Call Frank & Kraft or (317) 684-500 for an appointment to discuss charitable giving as part of your estate plan. Read More!
Latest Posts by Paul A. Kraft Estate Planning Attorney
(see all)