How to Support Your Favorite Charities with Estate Planning

It is possible to support your favorite charities both during your lifetime and after you pass away. In fact, there are a few estate planning options that can help you do just that. You can create a trust such as a charitable lead trust or charitable remainder trust, which will allow you to give money to charity each year or upon your death. This is a great way to receive tax benefits both during your lifetime and as part of your estate planning. You can also make your favorite charity a beneficiary of your retirement account. You have options!

An experienced Milwaukee estate planning lawyer can help you better understand your options for supporting your favorite causes through estate planning. At Margerie Law, we care about our community and we want to help you make a difference. Contact us today to learn more.

Here are our tips for supporting the causes you care about through estate planning.

Create a Trust.

A trust is a legal entity that can hold assets on behalf of another person or organization. There are two types of trusts that can be used for estate planning purposes:

• Charitable Lead Trust (CLT): A CLT is an irrevocable trust that pays income to one or more charities for a set period of time, after which the remaining assets in the trust are transferred to the non-charitable beneficiaries.

• Charitable Remainder Trust (CRT): A CRT is an irrevocable trust that pays income to one or more non-charitable beneficiaries for a set period of time, after which the remaining assets in the trust are transferred to the charitable beneficiaries.

Both types of trusts offer tax benefits to the grantor. Charitable Lead Trusts offer an immediate income tax deduction for the present value of the payments made to charity. Charitable Remainder Trusts allow the grantor to defer taxation on the appreciated assets transferred into the trust until they are sold by the trust, at which time only capital gains tax will be owed on the sale. In both cases, the grantor can avoid paying estate tax on the assets in the trust.

Make Your Favorite Charity a Beneficiary of Your Retirement Account.  

When you name a charity as a beneficiary of your retirement account, the account proceeds will be paid directly to the charity upon your death, avoiding both estate and income taxes. You can name a charity as the primary beneficiary of your retirement account and your family members as the contingent beneficiaries, or you can name the charity as both the primary and contingent beneficiary.

Give During Your Lifetime. 

You can make gifts to charity during your lifetime and take an immediate income tax deduction for the value of the gift. If you make a gift of appreciated assets, such as stocks or mutual funds, you can avoid paying capital gains tax on the appreciation.

If you have the means, you may consider setting up a private foundation to support your favorite charities both now and after you pass away. A private foundation is a separate legal entity that can receive and administer charitable gifts and gives you the most control over what happens with your money. However, one drawback to a private foundation is the additional time and money it takes to administer.

Talk to an Estate Planning Attorney. 

Most people want to support their favorite charities, but they may not know how to do so through their estate planning. There are a few different ways to give to charity through your will or trust, and each has its own benefits. An experienced estate planning attorney can help you understand your options for supporting your favorite charities through estate planning and ensure that your estate plan is properly structured to achieve your goals.

At Margerie Law, we care about our community and we want to help you make a difference. I’m Paul Margerie. I specialize in estate planning, wills, trusts, and more. Contact me today to learn more about how we can help you support the causes you care about through estate planning.