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A Primer on Charitable Giving Via Estate Planning

Charitable contributions are a vital source of income for most non-profit philanthropic organizations no matter what demographic the charity serves (low-income families, animals, the elderly or schoolchildren, among others) or what type of aid it provides (meals, bill-paying assistance, funds for spaying/neutering or sheltering families without homes, just to name a few).

In addition to making periodic donations to your favorite charitable organization, though, you can also make long-term gifts through the careful use of various estate planning tools. The Internal Revenue Service (IRS) recognizes the true importance of charitable giving, and the U.S. Tax Code contains provisions that allow tax breaks for both the person/company/organization gifting the money and the charity receiving it.

What Types of Long-Term Charitable Gifts Are Available?

There are several different ways in which common estate planning tools – wills, trusts and investment accounts – can be used to meet philanthropic goals. These include:

  • Naming the charity as a beneficiary in a will, trust or endowment document
  • Setting up what is known as a “charitable remainder trust” that lets the donor receive income from the trust during his or her lifetime and then lets the money go to the charity tax-free upon death
  • Transferring property or funds to a charitable organization with a “charity gift annuity” that will yield an income for the donor during his or her lifetime but fully transfer to the charity upon the donor’s death
  • Naming the charitable organization the beneficiary of an investment account (like an IRA or a 401k) or insurance policy

It may sound relatively simple to just name the charity as the beneficiary of funds or to set up an annuity in the charity’s name, but charitable giving must be done properly in order to ensure the greatest benefit for both parties. If you are interested in learning more about the ways in which estate planning tools can be used to best accomplish your philanthropic goals, contact an experienced
estate planning attorney in your area today.