Giving money to charity through your estate plan is a great way to leave a positive legacy while also minimizing your potential estate tax burden. Estate planning can be a challenging process, but with the assistance of a skilled attorney you will be able to provide some significant funds to charitable organizations and make a positive difference in the world.
The following are some tips from our estate planning attorneys to make this happen:
- Keep in mind the tax benefits: Your estate’s value does not include any money you leave to charity through your estate plan. Specifically, this money is tax-deductible up to 50 percent of adjusted gross income when the money goes to qualified organizations. You may use this to your benefit to significantly decrease your tax burden.
- Donate throughout your lifetime to maximize tax benefits: If you regularly give money to charities throughout your life, it will both reduce the value of your estate and give you the added benefit of taking advantage of income tax deductions. By benefitting from these savings in your income taxes, you can actually leave behind more to charity after your passing, which is beneficial for both the organizations and your loved ones.
- Give beneficiaries the option to disclaim: You may put certain provisions in your estate plan to allow your children the opportunity to disclaim at least a portion of their inheritance and give it to charity instead. You may choose from a variety of qualified charities to donate these disclaimed portions of inheritance to, and those disclaimed portions are not subject to taxation from the Internal Revenue Service.
- Create a charitable lead trust: A charitable lead trust can help you maximize the benefits of charitable donations in your estate planning process. A charitable lead trust must donate a certain amount of money to charity each year during your life for a specific time period, which you choose. The remainder of the money will then go to your children. A maximum, zeroed-out charitable lead trust would see no estate or gift taxes applied to that remainder. Upon your death, the issue simply becomes how old your children must be once they receive the remainder funds.
- Create a charitable remainder trust: Another valuable estate planning tool for charitable donations is a charitable remainder trust. You may put low-tax basis assets into this trust and sell them off, which defers estate taxes and provides additional income. Charities must receive a minimum of 10 percent of the present value of the charitable remainder trust upon your passing. You also get an upfront income tax deduction by simply setting up this type of trust.
If you are looking for additional ways to donate to charity through your estate plan, meet with a knowledgeable estate planning lawyer to discuss the various options available.
Schedule Your Free Consultation with Our Michigan Experienced Estate Planning Attorney
Einheuser Legal, P.C. is an estate planning law firm in Bingham Farms, Michigan. We help families set up wills and living trusts. Attorney Michael Einheuser is an experienced estate planning lawyer serving residents in Bingham Farms, Troy, Farmington Hills, Rochester Hills, Southfield, West Bloomfield Township and Bloomfield Township. Schedule your free consultation today by calling 248-398-4665.