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While most people focus on providing for their loved ones through their estate planning, charitable giving might be something you want to add to your overall plan. Charitable giving lets you help causes that are close to your heart while at the same time allowing you to minimize tax burdens on your heirs.
Creating Charitable Trusts
One of the best ways to maximize tax benefits if you give to charity through estate planning is to create charitable trusts. These trusts are tools that can help you achieve your financial and charitable goals at the same time.
One of the main types of charitable trusts is a charitable remainder trust (CRT). In a CRT, you transfer assets into the trust. Often, assets are real estate, stocks, or other investments. For a specific period, your beneficiaries or you receive income from that trust until that set time is over. After that, the money goes to your chosen charity.
A CRT can be a great choice if you want to have an income stream, support the causes you’re dedicated to, and potentially reduce taxes.
Another type of charitable trust is a charitable lead trust (CLT). This trust pays income to the charitable organization of your choosing for a set period. After that, the assets go to your beneficiaries. A CLT is helpful for the process of minimizing estate and gift taxes.
Funds: Charitable Giving Accounts
One type of charitable giving account you can turn to is a donor-advised fund (DAF). A DAF lets you contribute securities, cash, or other assets, allowing you to get immediate tax deductions.
You’re then able to recommend grants from the fund to go to specific charitable organizations. This option offers more flexibility while letting you be involved in philanthropic decisions.
Another type of fund is a pooled income fund. It’s similar to a mutual fund, but instead of involving investments, it works with donations. Every time you contribute securities or cash to the fund, you receive immediate tax deductions.
One other benefit this fund offers is that you earn annual income based on the performance of all contributions. On your death, the balance goes to supporting charitable causes.
Why You Should Include Charitable Contributions In Your Estate Plan
The most obvious reason to plan for charitable contributions is that you want to help the charity you support even after you’re gone. For many, that’s an important part of their legacy.
Tax deductions are another consideration. When you add charitable contributions to your estate plan, you could be eligible for tax deductions — either during your life or after your passing. These deductions can lower applicable estate taxes by helping reduce your estate’s overall taxable value.
When you make charitable donations part of your estate plan, you’re also instilling future generations with your values. It can help promote social responsibility in your heirs and maintain your legacy.
Charitable contributions may also be able to bypass probate and go directly to the designated organizations. That means there will likely not be any delays or additional costs, allowing charities to receive timely help.
Contact an Experienced Louisiana Estate Planning Lawyer
Ensuring your heirs are taken care of and your legacy is safe means relying on estate planning strategies. The larger the estate, the more complex every process can be, so you’ll want to rely on experienced estate planning lawyers for help.
At Kallio Law Firm, we offer all manner of estate planning services in Prairieville and South Baton Rouge, LA. Don’t wait to begin this process. Call us at Kallio Law Firm.
