Charitable Giving

Many of our clients have asked us about how to leave money to charities they feel strongly about. This could include gifts to your local church, the college you attended, or an organization engaged in charitable work of some sort. While charitable giving is wonderful, you should make sure you understand the variety of ways you can structure your gifts, each with its own set of benefits and drawbacks. If done properly, this type of gifting can allow you to benefit the organization of your choice while giving you or your heirs significant income tax benefits. Done poorly, it can cause a variety of issues both for you and your family.

For instance, there are a number of ways you could structure a trust to give the charity of your choice a gift over time. Depending on how you structure this gift, the tax benefit could either be for you or for your beneficiaries after you have passed.

Deciding how to structure the gift will depend a lot on your current income taxes as well as the types of assets you plan to use to fund the gift. For instance, we have had several clients fund charitable gifts with retirement accounts or annuities, thus saving them and their heirs significant amounts of income tax while leaving a gift to fund a worthy cause.

On the other hand, some clients with larger philanthropic goals may want to consider setting up a nonprofit organization of some kind, such as a private foundation. This allows you to set up either a trust or company that is tax-exempt and that will give gifts for the purposes you designate for as long as there are funds available. These gifts could be managed by trusted family members, friends, or advisors. You can also be very specific about who the foundation will benefit. For instance, you could set up a foundation that only gives grants to animal shelters in Lexington or Richland County.

If set up and managed properly, a foundation could last and continue giving gifts for generations to come. However, setting something like this up means a lot of planning before you get started and requires filings with the IRS. There is a lot of work involved, but it can all be worth it to ensure you leave a legacy that will last.

While this area of the law can seem complex and a little overwhelming when you consider all of the ways you can structure your gifts, we can get you on the right track and make sure you are maximizing the benefits to you and your family while leaving gifts in exactly the way you wish. If you or someone you know is considering charitable giving as part of your estate plan, give us a call. We are happy to discuss your individual goals and help you put together a plan custom-tailored to your individual needs.

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