Four Strategies To Leave Money/Property To Benefit A Charity As Part Of Your Estate Plan
Are you considering leaving money, property, or other assets to charity as part of your estate plan? If you, you will obviously want to make the biggest possible impact. There are specific estate planning strategies that you can use to leave a gift to support a good cause in a cost-effective manner. Within this article, our Boston estate planning lawyer highlights four strategies that you can use to effectively leave money or property to a charitable organization.
- Make a Qualified Charitable Distribution from Retirement Account
As explained by the Internal Revenue Service (IRS), there are specialized tax provisions in place that allow people to make a cost-effective contribution to a charitable organization. Specifically, a Qualified Charitable Distribution (QCD) allows individuals over 70 and one half years old to donate up to $100,000 annually directly from their IRA to a qualified charity. The distribution counts towards the Required Minimum Distribution (RMD), but it is not included in taxable income—meaning it could potentially lower your overall tax liability.
- Give Appreciated Stock to Charitable Organization
Do you have stock that has appreciated a significant amount since you purchased it? If so, you are likely to incur capital gains tax liability when you sell it. However, if you give appreciated stock to a charitable organization, that may be the most tax-efficient and cost effective option. If you have held the stock for more than a year, you can deduct the full market value on your tax return and avoid paying capital gains tax on the appreciated value. The method not only increases the donation’s value to the charity but also reduces your tax burden—a win-win scenario.
- Use Your Will to Name a Charity as a Heir
You do not have to do anything complicated when giving money to a good cause. Incorporating a charity as a beneficiary in your will is a straightforward approach to include charitable giving in your estate planning. You can designate either a specific dollar amount or a percentage of your estate to go to the charity.
- Set Up a Charitable Trust (CLT or CRT)
For larger or more complex contributions, the best option is often to set up a charitable trust. Establishing a Charitable Lead Trust (CLT) or Charitable Remainder Trust (CRT) offers flexibility and tax benefits. A CLT allows you to provide a fixed annual amount to a charity for a designated period, with the remaining assets eventually passing to your heirs. In contrast, a CRT pays you (or another designated beneficiary) a percentage of the trust’s assets annually, with the remainder going to the charity. The right option depends on your financial situation and your goals.
Contact Our Boston Estate Planning Attorney Today
At Fisher Law LLC, our Boston estate planning lawyers have extensive experience handling charitable giving issues. If you have any questions about leaving money to charity, we are here to help. Contact our firm today to set up your strictly confidential, no obligation initial consultation. Our firm handles estate planning matters all across the Greater Boston metropolitan area.
Source:
irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-distributions-withdrawals#:~:text=What%20is%20a%20qualified%20charitable,IRA%20to%20a%20qualified%20charity.
