If you are someone who feels strongly about philanthropy, you probably make charitable gifting part of your everyday life. If so, why not carry on your charitable endeavors after you are gone as well. A Lincolnshire estate planning lawyer at Hedeker Law, Ltd. explains some common methods used to incorporate philanthropy into an existing estate plan.
Is Philanthropy Important to You?
If philanthropy is important to you now, why not make it part of the legacy you hand down to your loved ones when you are gone? Philanthropy can take many forms and can involve a wide range of beneficiaries. The type of gifts and beneficiaries you hope to include in your estate plan will play an important role in determining which charitable gifting strategies you use in your estate plan.
Ways to Include Charitable Gifting in Your Estate Plan
If your goal is to continue your charitable gifting after you are gone, and make your philanthropy part of your legacy, you may wish to consider the following options:
- Last Will and Testament – a Will can always be used to make charitable gifts; however, there are several drawbacks to using this method. To begin with, using your Will to make charitable gifts means you will almost surely miss out on tax benefits that would otherwise be available when making charitable gifts. In addition, when you make a direct gift in your Will, you give up control over how those assets are used. Finally, if you hope to involve your children, or other younger relatives, in your philanthropic endeavors, you will need to use a more sophisticated method of continuing your charity work.
- Charitable Lead or Charitable Remainder Trust – charitable lead and charitable remainder trusts are specialized trusts that allow you to gift to both a charitable and a non-charitable beneficiary. With a charitable lead trust (CLT) a charitable beneficiary receives distributions from the trust for a specific period of time first. At the end of the designated time period, the remaining assets are distributed to the non-charitable beneficiary. A charitable remainder trust (CRT) works in reverse with the non-charitable beneficiary receiving distributions first and the remainder going to the charitable beneficiary.
- Charitable Gift Annuities – conceptually, a charitable gift annuity is similar to a trust. You make a donation of cash, or other assets needed by the charity, in return for which you, or another beneficiary (or more than one beneficiary), receives a fixed annuity payment for a designated period of time.
- Private Foundation – a private foundation is the most complex, yet most potentially rewarding, option. A private foundation is a non-profit organization that manages its own funds and can be used to make charitable gifts to numerous and varied causes. Because of the cost involved in setting up and operating a foundation, this option is only practical if you plan to donate a sizeable amount to charity in your estate plan. Along with numerous tax advantages, one of the biggest benefits to creating a private foundation is that it gives you the opportunity to involve future generations in philanthropic gifting in a hands-on manner. As the creator of the foundation, you can establish guidelines for what type of gifts will be made and what type of beneficiaries will be considered; however, your children, grandchildren, and future generations will be able to experience charitable gifting first-hand through the operation of the foundation.
Contact a Lincolnshire Estate Planning Lawyer
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns about how to include philanthropy in your estate plan, contact an experienced Lincolnshire estate planning lawyer at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.