Charitable Giving and Estate Planning: How Can a Lawyer Assist You?

Incorporating charitable giving into your estate plan is a wonderful way to make a lasting impact and give back to causes you care about. However, to reap the full benefits while still providing for your loved ones requires some careful planning. An estate planning lawyer at Hammond Law Group can provide invaluable guidance on integrating charitable giving into your plan tax-efficiently.

Here are some of the key ways an estate planning attorney can help with charitable giving strategies as part of the estate planning process.

Advising on Bequests

The simplest way to include charitable giving in your estate plan is to name one or more charities to receive bequests of specific dollar amounts or percentages of assets through your will or living trust. Your attorney can help select appropriate charities and properly document the bequests for full tax benefits.

Establishing Donor Advised Funds

Donor-advised funds offer a flexible way to set aside funds earmarked for future donations to your choice of charities. Your lawyer can assist you in establishing a donor-advised fund account and documenting clear instructions for how the fund should be used to support desired charities after you pass away.

Creating Charitable Remainder Trusts

Charitable remainder trusts allow you to place assets into a trust that pays annual income to family members you select, with the remainder going to charity after their passing. This can save on taxes while providing ongoing income. Your attorney will advise you on using these trusts strategically.

Making IRA Charitable Rollovers

Those age 70.5 and over can make qualified charitable distributions from IRAs of up to $100,000 annually without owing income tax on the withdrawals. Your lawyer can help you take full advantage of this tax-saver if you intend to gift IRA funds to charity. They can coordinate required paperwork and make sure the donation meets specifications to qualify as a rollover. For example, the distribution must be made directly from the IRA trustee, payable to the charity. 

Gifting the IRA withdrawal yourself will not qualify. Your attorney can guide you through the process to properly document the gift and direct the IRA trustee accordingly. They can also help you identify worthy charities and causes to benefit from your donated IRA rollover assets. With an attorney’s assistance, you can optimize IRA charitable rollovers to achieve tax savings and meet philanthropic objectives.

Minimizing Capital Gains Taxes

When you donate appreciated assets like real estate or stocks to charity through your estate, the charity can sell the assets tax-free, eliminating capital gains taxes. Your attorney will ensure your plan fully leverages this benefit.

Helping Split Large Gifts

To take full advantage of estate and gift tax deductions, it is sometimes wise to split large charitable gifts between spouses. Your lawyer can make sure such gift splitting is done legally and properly documented. For example, a married couple can collectively give up to $30,000 per year to a charity gift tax-free. However, if only one spouse donates the entire $30,000 amount, the annual exclusion is wasted for the other spouse. 

By legally gift splitting, each spouse can claim $15,000 against their individual exclusion, doubling the amount gifted annually tax-free. Your estate planning attorney can file the appropriate IRS forms and include the required language in your estate planning documents to legally split charitable gifts. This allows you to optimize the use of deductions and enhance tax savings.

Naming the Charity as a Beneficiary

Naming a charity as beneficiary of a retirement account or life insurance policy ensures a significant donation while avoiding income taxes beneficiaries would owe. Your attorney can assist with the beneficiary designation details to actualize this strategy.

Advising on Private Foundations

If your charitable goals are extensive, your lawyer may suggest a private family foundation as part of your legacy. They can help with the complex legal steps involved in establishing a foundation in the most tax-favored way. Creating a private foundation allows you to make substantial charitable gifts while retaining control over how donations are directed over time. 

Your attorney can advise you on important considerations like the types of charities you can donate to, minimum distribution requirements, prohibitions on self-dealing, and excise tax regulations. They can also help draft the necessary foundational documents, apply for tax-exempt status with the IRS, and handle ongoing legal filings. With an attorney’s guidance, a private foundation may allow you to create a lasting charitable legacy long after you are gone.

Outlining Specific Charitable Wishes

Your attorney can ensure your charitable wishes are clearly articulated in an ethical will or trust memo, providing helpful context about causes and organizations you want to be supported through gifts made as part of your estate plan.

Adding Charitable Provisions to Documents

Appropriate charitable gifting provisions can be added to key documents like your revocable living trust and powers of attorney to allow successors to continue planned charitable gifts on your behalf if you become incapacitated. A lawyer at Hammond Law Group in Colorado Springs will know how to properly incorporate this language.

The right estate planning attorneys have the legal expertise and charitable giving knowledge needed to help you develop a plan that responsibly provides for your family while also advancing cherished philanthropic goals. Integrating charitable giving into your estate plan magnifies the impact you can make.

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