Are you someone who gives regularly and generously to charity? If so, you may hope to continue your charitable gifting after you are gone. While you can simply make charitable gifts in your Last Will and Testament, there are other options that offer additional benefits to both you and to the recipient. The Los Angeles estate planning attorneys at Schomer Estate & Wealth Advisors discuss common ways to include charitable gifting in your estate plan.
Charity and Your Lasting Legacy
If giving back is part of your deeply held belief system, why not make it part of the legacy you hand down to your loved ones when you are gone? The first step in making that happen is to define your charitable gifting goals. Charitable gifting can take many forms and can be directed at a seemingly endless number of beneficiaries. You may not be able to continue all your charitable gifting in your estate plan; however, you can certainly incorporate enough to make it part of your legacy. Take some time to decide which recipients and/or which type of gifts are most important for you to incorporate in your estate plan.
Charitable Gifts Made in Your Last Will and Testament
You certainly can make charitable gifts in your Will; however, doing so may not be your best option. To begin with, using your Will to make charitable gifts means you will almost surely miss out on tax benefits that would otherwise be available when making charitable gifts. In addition, when you make a direct gift in your Will, you lose all control over how that gift is used once the transfer is complete and the gift could be squandered instead of lasting for years to come as you intended. Finally, if you hope to involve your children, or other younger relatives, in your philanthropic endeavors, you will need to use a more complex method of continuing your charity work.
Charitable Gifting Options
If your goal is to continue your charitable gifting after you are gone, and include it as part of your legacy, you may wish to consider the following options:
- Charitable Lead or Charitable Remainder Trust. Charitable lead and charitable remainder trusts are specialized trusts that allows you to gift to both a charitable and a non-charitable beneficiary. With a charitable lead trust (CLT) a charitable beneficiary receives distributions from the trust for a specific period first. At the end of the designated period, the remaining assets are distributed to the non-charitable beneficiary. A charitable remainder trust (CRT) works in reverse with the non-charitable beneficiary receiving distributions first and the remainder going to the charitable beneficiary.
- Charitable Gift Annuity. In some ways a charitable gift annuity is like a trust. You donate cash, or other assets needed by the charity, in return for which you, or another beneficiary (or more than one beneficiary), receives a fixed annuity payment for a designated period.
- Private Family Foundation. A private family foundation is the most complex, yet most potentially rewarding, option. A private foundation is a non-profit organization that manages its own funds and can be used to make charitable gifts to numerous and varied causes. Because of the cost involved in setting up and operating a foundation, this option is only practical if you plan to donate a sizeable amount to charity in your estate plan. Along with numerous tax advantages, one of the biggest benefits to creating a private foundation is that it gives you the opportunity to involve future generations in philanthropic gifting in a hands-on manner. As the creator of the foundation, you can establish guidelines for what type of gifts will be made and what type of beneficiaries will be considered; however, your children, grandchildren, and future generations will be able to experience charitable gifting first-hand through the operation of the foundation.
Contact Los Angeles Estate Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about including charitable gifting in your estate plan, contact the experienced Los Angeles estate planning attorneys at Schomer Estate & Wealth Advisors by calling (310) 337-7696 to schedule an appointment.
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