If you have been fortunate enough to be in a position during your lifetime to donate to charitable causes, then you may wish to continue doing so long after your death. Just as you make plans to provide for your family members and loved ones after your death, you can include charitable giving in your estate plan as well. A thorough consultation with your Sacramento-San Joaquin Valley estate planning attorney is, of course, necessary in order to incorporate your charity into your estate plan; however, there are some key points about charitable giving and estate planning that may be helpful to understand.
A direct gift through your Last Will and Testament or Living Trust are options; however, special types of charitable trusts may offer more flexibility as well as offers probate and tax advantages that a direct bequest does not.
A charitable trust can be either an inter-vivos (lifetime) or a testamentary trust.
If you establish an inter-vivos trust, and distributions are to be made while you are still alive, then the trust will likely need to be an irrevocable trust.
The most common charitable trusts fall into one of two main categories — lead and remainder trusts
A Charitable lead trust provides income to a trust for a specific period of time and then gives the remainder to non-charitable beneficiaries, such as family members.
A charitable remainder trust provides income to non-charitable beneficiaries, such as family members, for a specific period of time, or life, and then gives the remainder to a charity.
A portion of the value of assets used to fund the trust may qualify as a current deduction for income tax purposes.
The amount that passes to a charity may qualify for an estate tax deduction upon your death, decreasing estate tax exposure.
You may be able to reduce capital gains taxes on assets that are used to fund a charitable trust.
If interested in these special types of trusts, the place to start is with a consultation with an experienced and qualified estate planning attorney.
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