If there is a charity that is of great personal significance to you, such as an association helping abused animals or a group that provides college scholarships to low-income teens, estate planning can be used to ensure that your support remains part of your legacy.
One popular way to leave money to charity is to create a bequest. This is an easy and flexible way to support a favorite cause, since you can adjust the size of the gift or change the recipient at any time you like. You can also specify that the recipient use the money towards specific projects, although this should be discussed with the charitable organization beforehand. A bequest limits the size of your estate, thus reducing the amount of money subject to taxes. However, this means you can’t earn a tax deduction for your gift.
Another way to support a favorite charity is to list a charitable organization as the beneficiary on your IRA or retirement plan instead of a friend or family member. The charity won’t need to pay income taxes on the gift it receives and the gift won’t need to go through probate. The charitable gift will also be deductible for estate tax purposes.
To provide yourself with a consistent income for the rest of your life while still supporting a favorite charity, you can set up an irrevocable trust and transfer your assets into the trust. The trust can pay you an income for as long as you need, then the remaining money will be given to charity.
If you have sizable assets and are confident in the investments of your trust, you can create a charitable lead trust that gives income to the charity of your choice for a specific time period. Then, when the time period is over, your chosen heir receives the remaining principal.
How Can We Help?
Consulting an experienced estate planning attorney is the best way to ensure that you’ll be prepared no matter what the future holds. If you are in need of legal representation relating to an estate planning issue, please call our office at (626) 683-8113 or email us at info@PasadenaLawOffice.com.