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Understanding Charitable Planning

Skilled estate planning attorneys from Wood Law Group can offer valuable advice regarding your Charitable Planning. Call to schedule your consultation today!

What Is Charitable Planning?

If there’s a charitable organization dear to your heart that you’d like to support long-term or beyond your lifetime, consider charitable planning to help you actualize this goal.

Charitable planning is an aspect of general estate planning. It involves setting up a comprehensive plan of action to help you donate to philanthropic causes and your favorite charities while getting some benefits in return. It helps you decide in advance what type of charitable gift or financial contributions to make, how much to give, when and the ideal channel for your donation that would best serve you and your chosen charity. 

There are several benefits to charitable planning, but the most remarkable aspect is that you can ensure that your preferred charities continue to receive donations from you even when you’re no longer around. 

The outcome of the process is a charitable plan, which is simply a clear expression of your philanthropic goals/wishes. But to ensure that your wishes are carried out even in your absence, it is important that your charitable plan is prepared and executed using the proper legal mechanisms. You’ll likely need a lawyer to help you get this right since many legal concepts and instruments may be involved. But in the meantime, keep reading to learn more about the benefits of charitable planning, how the process works, and some possible charitable planning strategies you might need.

The Benefits of Charitable Planning

Charitable planning can benefit you in several ways, including the following:

  • Reduced taxes: Charity donations can provide significant tax benefits for you. You can get an income tax deduction depending on the type of charitable donation you make. This means instead of paying money to the government from your income, you can do some good by donating the money you would have paid as tax to a worthy cause.

    If your charitable plan is incorporated into your will, it could also help to reduce estate taxes for the benefit of your beneficiaries. You can contact a skilled estate planning attorney to understand how this works.

  • Staying accountable financially: Charitable planning encourages financial prudence and budgeting. Instead of donating to your choice non-profit organization on a whim or out of pocket, you can decide on a fixed sum to donate periodically during the charitable planning process. This way, you can be sure that your philanthropy won’t deplete your finances.

  • Help charities stay afloat: Charitable planning helps your favorite charities function and stay organized, knowing they can expect to receive your donations at set times.

Types of Assets You Can Donate to Charity

During charitable planning, you’ll need to consider the type of charitable gifts you’d like to make. Generally, you can make a gift of any asset, including:

  • Cash

  • Publicly traded or private securities such as stocks and bonds

  • Real estate

  • Life insurance policy

  • Mutual funds

  • Automobiles

However, in charitable planning, all assets are not equal even though they may have an equal monetary value. For example, while cash or check gifts, like other donations to charity, are income tax-deductible, the amount you can deduct is usually limited by the Internal Revenue Service (IRS). Whereas for other kinds of assets that appreciate in the long term, such as real estate or securities, you can deduct the property’s fair market value while avoiding capital gains taxes that you would have paid if you sold the property.

Charitable Giving Strategies

 

You could use several strategies to make a donation, depending on whether you want to donate to charity in your lifetime or posthumously or perhaps earn income from the donated assets. Some of the more common charitable giving strategies include:

 

Outright Gifts

Outright gifts are the simplest and most common form of charitable giving. It is appropriate when your donation is a one-off. If you intend to donate to a specific charity continuously, you may need to consider other giving strategies, especially if your donation is substantial.

 

Charitable Remainder Trust

Charitable remainder trusts are created to provide future income to the beneficiaries (charitable organizations). This strategy allows you to donate to your preferred charity immediately without losing the donated assets. You can set up a trust to transfer the assets to the charity when you have passed on, leaving you free to enjoy them during your lifetime.

Creating a trust can help your beneficiaries, including your chosen charities, avoid probate on bank accounts and other assets when you are no more. This would allow them to enjoy your gift without going through the difficulties associated with the probate process. If you’d like to know about this gift-giving strategy, ask a trust lawyer in Las Vegas who understands Nevada probate laws for further details.

 

Private Foundations

If you’d like to support a specific charitable cause, you can set up a foundation as a separate legal entity for that purpose. You can then transfer the assets you wish to donate to the foundation whose management would use them to further its objectives.

 

Charitable Gift Annuities

A charitable gift annuity is a contract that allows a person who makes or has made a substantial donation to a charity to receive a lifetime income from the organization in exchange for their gift. You can explore this option by donating cash, securities, or real estate, depending on the policy of the receiving organization. In return, you get a partial tax deduction and an income for life.

 

Donor Advised Funds

If you’d like to donate significant money to a public charity, you can consider doing so via a donor-advised fund. You can establish a donor-advised fund by opening a giving account at a public charitable trust or organization, just as you would at an investment bank. Once you open and fund the account, the umbrella non-profit organization will manage the donation and use it to fund other charities you may recommend.

There are many giving strategies or channels to choose from, each with varying benefits and legal implications. It is important that you fully understand what each strategy entails before you commit, as charitable donations are non-refundable. You can’t get your money back if you change your mind.

How an Estate Planning Attorney Can Help

An estate planning attorney can help you understand the pros and cons of the available giving strategies and help you determine which is suitable for you. Also, some of the charitable giving vehicles require specific legal documentation to be valid, so it is important that you consult an attorney to help tidy up any legal loose ends if you’ve decided on a course of action.

Furthermore, charitable planning is not a one-off event. It may require periodic review as your circumstances change or you acquire more assets. In such cases, your lawyer can evaluate your charitable goals and current assets and make the necessary adjustments to ensure that your donation continues to benefit you and the charities you choose.

 

Need Help With Charitable Planning in Las Vegas? Contact Us at Wood Law Group

If you have further questions about charitable or estate planning, reach out to us at the Wood Law Group. We can assess your goals and finances and help you organize your charitable donations to benefit you.

Contact us immediately to explore your options, and let us help you create a suitable plan that is valid and enforceable for as long as you need.