When it comes to making final decisions for what to do with your estate, many people want to leave behind an impact on the world. Finding a way to donate assets to your favorite charity, cause, or institution is one way that many people choose to give back. Here are some of the things to know about gift planning and the ways that you can give back.
What is Gift Planning?
Gift planning is the intention to contribute a significant gift to an organization in the future after the donor passes away. It is also called planned giving or legacy giving. Depending on the specific non-profit you want to support, the terms could be used interchangeably.
Since you won’t be around to make arrangements to donate assets after your death, gift planning must be incorporated into estate plans while the donor is still alive. The major gifts are not given now, but at some point in the unknown future as a part of an estate. It is possible to use planned giving to support one or more non-profit organizations, as designated in the estate plans.
Typically, the amount of money that a person can donate is dependent on their income. Wealthier donors can make more sizable regular contributions. However, this isn’t always the case with gift planning, as the payouts include assets that are not a regular part of a person’s monthly income. For instance, planned giving can include donating a life insurance policy, business equity, and real estate.
Types of Gift Planning
There are a variety of options that you could use to incorporate gift planning into your estate plans. Some of the most common options include:
Many people simply opt to add planned giving into their wills to be able to give assets to non-profits that they support. This can take place at the same time when you decide to make a will to provide for your family members. In this case, it isn’t a separate document. An estate planning attorney can help you to plan your bequest. You can leave a non-profit tangible personal property such as a painting, jewelry, or a car, or you can opt for a residuary gift to give whatever is left after other parts of your will and any debts have been paid.
A trust is a separate legal entity that you create with your estate planning lawyer to hold or invest property or assets. There can be multiple beneficiaries for trusts, so it is possible to leave a non-profit organization a gift, as well as family and friends assets, using the same trust.
Non-profit organizations can be listed as a beneficiary of retirement plans, including 401(k) and IRA plans. You can specify what percentage the non-profit receives from your retirement plans the same way that you would add an additional beneficiary. This can be advantageous from a tax standpoint, as it will enable you to pay less in federal taxes by investing more into retirement accounts.
Life Insurance Policies
Similarly, non-profits can be designated as a beneficiary of life insurance policies. This can allow anyone to leave an important charity or cause with a significant gift that wouldn’t have otherwise been possible.
Donor-advised funds are an excellent option to grow charitable giving over time. With a donor-advised fund, you invest money to grow for charitable donations. Some larger foundations and charities may offer their own programs as a part of their non-profit fundraising options. You can decide when, how often, and which organizations will receive the funds. This can include legacy giving.
An annuity is a fixed amount of money that is paid out to a recipient each year. Tangible gift annuities allow donors to have a contract in place to pay an organization a certain amount of money after the donor’s death. Your estate planning attorney can work with you to set up annuities in a way that is the most beneficial to the chosen organizations and other recipients.
Contact a Chicago Estate Planning Attorney
If you want to learn more about gift planning for your estate, work with a top Chicago estate planning attorney like James C. Provenza, who can guide you through the process. James C. Provenza is an Illinois estate planning attorney with 20 years of experience in law. Call James C. Provenza & Associates today at (847) 729-3939 to schedule a consultation with a member of our team or use our online contact form.