For some people, generosity is a way of life. If you are one of those people, you likely have several charities or causes that are dear to your heart. Throughout the course of your lifetime, you might make repeated gifts to these charities and/or causes.
If your charitable gifting is sizeable or frequent, the recipients may even depend on those gifts. If so, have you considered what’ll happen when you are gone? The good news is that your charitable gifting doesn’t have to come to an end at the end of your life. With careful estate planning, your charitable giving can continue to help those in need long after you are gone.
Defining Your Charitable Giving Goals
If charity is part of your deeply held belief system, why not make it part of the legacy you hand down to your loved ones when you are gone? The first step in making that happen is to define your charitable gifting goals.
Philanthropy can take many forms and can be directed at a seemingly endless number of beneficiaries. You may not be able to continue all your charitable gifting in your estate plan, but you can certainly include enough to make it part of your legacy. Take some time to decide which recipients and which type of gifts are most important for you to include in your estate plan.
Can’t I Just Make a Charitable Gift in My Last Will and Testament?
This is one of the most frequently asked questions by those who wish to include charity in their estate plan. You can make charitable gifts in your Will; however, there are a number of reasons why making gifts in your Will is not the best option. To begin with, using your Will to make charitable gifts means you will almost surely miss out on tax benefits that would otherwise be available when making charitable gifts.
In addition, when you make a direct gift in your Will, you lose all control over how that gift is used once the transfer is complete. Finally, if you hope to involve your children, or other younger relatives, in your philanthropic endeavors, you will need to use a more complex method of continuing your charity work.
Common Options for Including Charitable Giving in Your Estate Plan
If your goal is to continue your charitable gifting after you are gone, and make your charitable giving part of your legacy, you may wish to consider the following options:
- Charitable Lead or Charitable Remainder Trust: Charitable lead and charitable remainder trusts are specialized trusts that allows you to gift to both a charitable and a non-charitable beneficiary. With a charitable lead trust (CLT) a charitable beneficiary receives distributions from the trust for a specific period of time first. AT the end of the designated time period, the remaining assets are distributed to the non-charitable beneficiary. A charitable remainder trust (CRT) works in reverse with the non-charitable beneficiary receiving distributions first and the remainder going to the charitable beneficiary.
- Charitable Gift Annuities: Conceptually, a charitable gift annuity is similar to a trust. You make a donation of cash, or other assets needed by the charity, in return for which you, or another beneficiary (or more than one beneficiary), receives a fixed annuity payment for a designated period of time.
- Private Foundation: A private foundation is the most complex, yet most potentially rewarding, option. A private foundation is a non-profit organization that manages its own funds and can be used to make charitable gifts to numerous and varied causes. Because of the cost involved in setting up and operating a foundation, this option is only practical if you plan to donate a sizeable amount to charity in your estate plan. Along with numerous tax advantages, one of the biggest benefits to creating a private foundation is that it gives you the opportunity to involve future generations in philanthropic gifting in a hands-on manner. As the creator of the foundation, you can establish guidelines for what type of gifts will be made and what type of beneficiaries will be considered; however, your children, grandchildren, and future generations will be able to experience charitable gifting first-hand through the operation of the foundation.
If you have additional questions or concerns regarding how to incorporate charitable giving into your estate plan, contact the experienced Georgia estate planning attorneys at Fouts Law Group, LLC by calling (678) 242-8344 to schedule an appointment.
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