Charitable giving can leave a legacy of generosity for years and even decades after you have passed away. Not only does charitable giving have a philanthropic appeal, but it provides enormous income, state, capital gains, and gift tax deduction benefits. While some donors gift money during their lifetime, others bequeath assets to charity through wills and trusts that go into effect upon their deaths.
Depending on the type of charity you select, your contributions and end goals, you should review the following before putting your wishes in writing.
Decide How You Want To Give
There are various ways you can gift assets to charity, some of which include:
Charitable Remainder Trusts (CRTs) – You can avoid capital gains during your lifetime by making irrevocable contributions to a CRTwhile leaving the remainder to charity upon your passing.
Charitable Lead Trusts (CLTs) -A charity can receive CLT assets during the trust’s lifetime and, at the trust’s end, the remainder of assets will be left to your beneficiaries.
Private Foundations – You can establish a private foundation when you pass away that will gift assets to a charity or charities.
Donor-Advised Fund (DAF) – You can contribute money to a DAF and make charitable donations during your lifetime.
Residuary Bequests – After estate taxes and expenses have been paid, you may leave the residue of your estate to charity.
Whether you choose one or a combination of the above ways to donate, each one comes with unique tax benefits to consider.
Taking The Next Steps
After you decide how you would like to gift assets during and after your lifetime, you must take certain steps to put your plan into action.
Before you can create a plan, you must first:
• Decide how much you are willing to give
• Research and contact charities
• Contact an estate planning attorney
• Consider sharing your plans with loved ones
As Californians, many of us are fortunate enough to have the opportunity to give back. Planning wisely can accomplish this goal and provide personal tax benefits along the way.