Are there special concerns to consider when including a charity in an estate plan?
When it comes to estate planning, charitable giving is virtually a win-win for all involved. For the testator, it can mean significant tax savings if the transfer meets certain criteria. For the charity, it means a welcome boost in capital and an opportunity to advance the mission of the organization. However, this notable endeavor should not be pursued casually, and an experienced Nevada attorney should always be consulted before implementing charitable giving into an estate plan.
Benefits of testamentary charitable gifts
Any transfer of money into a non-profit, tax-exempt organization will be free from the confines of both estate tax and income tax, making it the perfect component to a well-drafted estate plan. Oftentimes, testators have several charities they hold near and dear to their hearts, and a charitable giving plan can be easily implemented to not only maximize tax savings but provide each recipient with a much-needed donation.
Options in charitable giving
Making an outright gift to a charity through a Last Will and Testament is one (simplified) way to arrange for the transfer. The funds will be transferred to the charity upon the death of the grantor, and will not be included in the calculation of the decedent’s gross estate. Likewise, the charity will not be subject to any sort of estate tax or income tax on the gift, as it is completely tax-exempt.
Another option is to donate an Individual Retirement Account to a favorite charity, which is easily accomplished simply by adding the charity as the beneficiary upon the death of the accountholder. The funds will pass outside of the gross estate, will not be subject to any sort of taxation on either end, and will be immediately available to the charity upon the death of donor (i.e., no formal probate process is required).
Lastly, testators with more elaborate estate planning goals may wish to consider one of the many trust options geared toward charitable giving. A Charitable Remainder Trust (CRT) makes certain inter vivos distributions to individual beneficiaries during the life of the donor (or for a certain term), with the remaining trust corpus earmarked for the charity upon the death of the grantor or expiration of the term. Other options include a Charitable Lead Trust (CLT) or a Pooled Income Fund (PIF), the latter of which is maintained by the charity itself.
If you are interested in implementing a charitable giving
component to your estate plan, please do not hesitate to contact Stone Law Offices in Las Vegas, Nevada right away by calling (877)800-3424.