Why You Should Incorporate Charitable Giving into Your Estate Plan

You’ve named the beneficiaries in your Will, but would you like an additional way to leave a meaningful legacy for years to come? Think about including charitable donations in your estate plan. Turning to a reputable Cincinnati lawyer with expertise in taxation law and estate planning can help you set up for charitable giving and experience the benefits of doing so.

Benefits of Charitable Giving After You’re Gone

People of all income levels and backgrounds include charitable giving in their Wills for several reasons. Besides taking income tax deductions, you can avoid capital gains taxes, reduce payable estate taxes, and allow more of your assets to go to your beneficiaries.

Consider also the non-financial advantages of charitable giving. For instance, you may end up with unspent emergency funds that could go to a worthy cause. Also, some organizations could put your assets to good use, and at the same time you may have family members who insist they don’t need an inheritance. Finally, there’s the inherent reward of knowing that your generous contributions will make a difference to others’ lives or causes that mean a great deal to you.

Mechanisms for Charitable Giving

If you’re unsure where to start setting up a charitable gift, a local estate and legacy law practice will be a valuable resource. Your giving strategies can vary from simple to complex, and it’s wise to get a lawyer’s advice when leaving assets to a charitable entity. For instance, do you want to give while you’re still alive, after you pass, or both? Also, do you want to give cash or bequeath property?

Whatever you decide, you’ll need to include your terms through any of the following tools:

• Will or Trust: The least complicated in some cases is to make a charitable gift through your Trust or estate plan. The amount you give may lower the taxable amount in your estate.
• Retirement account: You can allocate some or all of your retirement earnings to charitable giving. Name your charities as beneficiaries to qualify for the tax benefits allowed by law. Many people do this if they have non-retirement assets to leave to their children and other heirs.
• Split-interest gift: This mechanism allows you to donate your assets and retain the legal benefits of holding them. More specifically, you would open and fund a Trust in the charity’s name, get a tax deduction, and avoid capital gains taxes when transferring the funds.

Remember that direct donations to universities, colleges, or hospitals don’t qualify as tax-deductible gifts. Therefore, if you want to fund a child or grandchild’s education or medical treatment, consider paying the institution directly. Doing so won’t impact the maximum gift amount allowable per person for appropriate tax exemptions.

Incorporate Charitable Giving into Your Estate Plan

Charitable giving isn’t just for the super-rich. If you have the funds and care about a cause or group in need, a donation will put that money to good use. If you want to include legacy giving in your estate plan, contact us at Donnellon, Donnellon & Miller. Our Cincinnati-based estate legal team will discuss your options with you, structure your donations wisely, and ensure your giving aligns with your overall financial goals.