18 Dec How to Use Your Estate Plan to Make Charitable Donations
Whether it’s donating time, food, or gifts to those in need, many people give back to their communities during the holiday season. However, if you’re looking to make a lasting impact, you should consider making a charitable donation through your estate plan. Read on to discover the benefits of using your estate plan for charitable giving and to learn how to set up a plan.
Benefits of using your estate plan for charitable giving
Using your estate plan for charitable giving provides a variety of benefits for you and your community. For example, donating to charity through your estate plan enables you to support a cause that’s important to you, even when you’re gone. Additionally, making charitable donations through your estate plan comes with certain types of tax breaks and retirement benefits depending on how the donations are made. At the same time, the organization you support gets the resources it needs to operate. With your generosity, they can integrate a new software, from the likes of UpMetrics or similar software development companies, to automate their workflow and analyse the impact their organisation is having on the issue they are fighting for. So, you’re able to help others as well as yourself by giving back through your estate plan. It sounds like a win-win. Just make sure that the tax breaks are deducted correctly, else you may need to submit a voluntary disclosure down the line to catch up. Taxes may not be your, strong suit, however, and if this is your first time giving like this then it might all seem a bit confusing. Should this be the case, it might be wise to get in touch with a tax preparation company like H&R Block when it comes to filing your tax return, and there may be additional info on discounts out there if you look around online.
How to set up your estate plan to make charitable donations
There’s a variety of ways to set up your estate plan to make charitable donations, including:
- Using your last will and testament: The simplest way to make a donation, according to this CNBC article, is to use your last will and testament. In order to use your last will and testament, all you need to do is list what assets you’d like to go to a specific charity. Then, the charity will receive those assets during the probate process after your death.
- Listing charities as beneficiaries: This strategy is also fairly simple. You would just need to list a charity as the beneficiary to an account. Then, after you’re gone, the money in the account goes to the charity listed.
- Creating a split-interest trust: This strategy is more complicated because it enables you to make a donation while still keeping some of the benefits of owning the assets. As explained in this this Schwab article, two types of trusts are commonly used when making charitable donations. The first is a charitable remainder trust. Using this type of trust, you, the donor, receive a fixed payment or percentage from the trust. This payment is made annually for a fixed number of years or until your death. The second type of split-interest trust is a charitable lead trust. With this type of trust, the charity receives an income for a certain number of years. Once the number of years is up, the remainder of the trust goes back to you or your heirs.
Since there are many ways to use estate planning to donate to charity, you should consult an attorney. This is because an attorney will be able to help you decide what your best option is based on the type of tax and retirement benefits you are looking for. To find out how Boyum Law Firm can help you donate to charity through your estate plan, click here.