There is a more comprehensive approach to the estate preparation process that can be better described as legacy planning.
A legacy plan can include acts of charitable giving if you are in a position to set aside resources for worthwhile causes and institutions.
Before we look at the charitable part of the equation, we will touch upon some of the other steps that you can take to shape the way you will be remembered after you are gone.
Matters of the Heart and Soul
Ethical wills stem from the Judaic tradition, and they have been used since biblical times to share moral and spiritual values. Modern end-of-life experts recommend these wills, but they emphasize the fact that you can take a more free-form approach.
You can look at an ethical will as a final letter to your loved ones, and there are no rules with regard to what you can choose to share.
Your personal memoirs could be part of the plan as well. If you record your formative experiences, your loved ones will get an intimate glimpse into your life’s path.
Many people become very interested in their roots at some point. As an elder, you invariably remember things about family members that have passed and the stories they told you about your ancestors. You may want to pass this information along for the benefit of others.
Family heirlooms are another consideration. You can take stock of the items that you have in your possession and choose the ideal caretaker for each object.
Charitable Giving Possibilities
There are a number of different ways that you can provide assets for charitable causes and institutions that mean something to you. In addition to direct gift giving, there are other methods that may be preferable for various reasons.
One very popular vehicle for charitable giving is the donor advised fund. The efficiency is a large part of the appeal, because you make a single contribution into the fund. You then make recommendations with regard to the charities and/or nonprofits that you want to support.
You get a tax deduction for the year during which the contribution was made, even if the fund does not distribute any of the resources during that year.
A private foundation is another possibility. Many people think that foundations can only be established by the super wealthy, but this is a misconception. There are over 40,000 private foundations in the country, and the majority of them are funded with less than $1 million.
Charitable trusts can be the right choice for people that have concerns about the federal estate tax. With a charitable lead annuity trust, you would fund the trust and it would provide fixed annuity payments to a nonprofit for a prescribed period of time.
The IRS would calculate anticipated interest accrual using the Section 7520 rate or “hurdle rate.” You could “zero out” the trust by contributing the entirety of the trust’s assets and the estimated interest to the charity.
Theoretically, there would be nothing left in the trust. However, interest rates have been historically low, so it is very possible that there will be a remainder. It would be transferred to a beneficiary of your choosing, and the federal transfer tax would not be imposed.
Attend a Free Webinar
We are conducting a series of webinars over the coming weeks, and you can learn a lot about the estate planning process if you join us for one of these sessions. There is no charge, and you don’t have to leave your couch, so should definitely take advantage of this opportunity.
You can see the schedule and obtain registration information if you visit our webinar page.
Schedule a Consultation Today!
We are here to help if you are ready to put an estate plan in place, and we can also help you update your existing plan if revisions are necessary. You can send us a message to request a consultation appointment, and we can be reached by phone at 310-337-7696.
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