Charitable gift giving is an important part of giving back to the community and supporting the causes we believe in. There is a range of ways you can take advantage of to help out local or national charities. You probably have dropped cash into a Salvation Army bucket during the holidays or bought a raffle to support a local school fundraiser. Perhaps you donated regularly to a charity that has a personal meaning to you such as the Alzheimer’s Association because your mother suffered from the disease.
However arranging gift giving in a formal way as part of your estate plan, it is more complicated. Charitable planning covers a range of gift giving and depending on your estate and your goals, each type has advantages or disadvantages.
Lets review some ways people donate to charity, including common choices for gift planning before meeting with your professional estate planning attorney.
Planned Giving
Planned giving is the way of supporting nonprofits and charities through your estate plan, while securing your legacy and enjoying certain tax benefits associated with this estate planning strategy. Gift planning is an estate planning strategy lets you make a lasting contribution to the causes you care about and fulfill your or your family’s or business’ long-term philanthropic goals. Gift planning can come in many forms, such as endowments, charitable trusts, gift annuities, and life insurance policies.
One of the main incentives of planned giving is the tax benefits. A few tax benefits of gift planning can include:
- Donors are able to contribute appreciated property, such as securities and real estate. Therefore, donors can receive a charitable deduction for the full market value of the asset and pay no capital gains tax on the transfer of assets.
- Donors who want to establish a life-income gift receive a tax deduction for the full market value of the contributed assets.
- Donors who contribute following their deaths make the assets exempt from the estate tax.
The tax code in a sense rewards you for donating to charity. Because the charity does so much good for a wide array of worthy causes, it makes sense to encourage that those who can make significant and sustained giving be encouraged to do so. In fact non profits and charities will be happy to explain how you can get a tax break for helping.
By working with an estate planning attorney experienced in designing your gift plan, you are able to give generously and with pride that you have established a personal legacy and a model for others to do likewise. Your considerate use of your funds in turn continue to make a positive impact for generations to come.
Charitable Trusts
Charitable trusts are important tools for individuals to make a lasting impact on the world. Charitable trusts provide donors two major options: a charitable lead trust (CLT) and a charitable remainder trust (CRT). These trusts allow donors to give to a charitable organization of their choice, designating a beneficiary that will receive the donation when certain conditions are met. Charitable donations through these trusts can be used for many different causes and have lasting effects that benefit both the donor and the charity. Like other types of trusts, there are tax benefits and probate is avoided.
Cash Donation and Non Cash Donations
Cash donations are an important part of charitable gift-giving. They can be used to make a direct impact and help those in need. Donating cash is often a quick convenient way to support charities and organizations. Donations can be made anonymously.
Non-cash donations are also a common way to donate. Examples on non cash items are furniture, clothing, home appliances, sporting goods, artwork or other assorted items that may be of use or value to the less fortunate. For example Goodwill is a recognized charity that accepts such items. Many of us hate to just throw things out when we know its still useful. When making a non-cash donation, you can deduct the fair market value of the item when you file your taxes. Do a google search for “charities near me” that accept items like furniture or check with your church or your other community organizations.
Benefits of Donating to a Charity
Donating to a charity is one of the most powerful and impactful ways to make a difference in the world. Not only will your donation help those in need, but should be a point of pride. You can feel proud knowing that your money is being put to use and helping to further good works you support.
When donating to a charity, you also inspired others to do more. For example beloved actress Betty White was a compassionate advocate for animals throughout the majority of her life and upon her passing, she inspired others to support the same cause.
Plus, donating to a charity often comes with well deserved tax benefits, so it can be seen as a win-win situation. You save your hard earned money and then are able to control the distribution of your assets to designated beneficiaries including charitable organizations.
Contact a Chicago Estate Planning Attorney Today
In the Chicago area, if you want to learn more about gift planning for your estate, contact with a top Chicago estate planning attorney James C. Provenza, who can guide you through the process. Building planned giving into your overall estate plan is achievable and Mr. Provenza is more than capable of advising you. Make a well-informed decision that benefits your favorite cause and establishes your legacy. Contact James C. Provenza & Associates, P.C. at (847) 729-3939 or by filling out our online form.
