Incorporating Charitable Giving In Your Estate Plan
Many individuals choose to incorporate a charitable bequest into their estate plan. For some, this decision stems from a deep sense of altruism; for others, the drive is the significant financial advantage. Yet, for the vast majority of donors, the charity they leave behind represents a harmonious blend of both motivations. Including charitable donations in your estate plan not only leaves a lasting legacy of generosity but also offers significant financial benefits, such as reduced estate taxes. Ultimately, integrating charitable giving in your estate plan is a meaningful way to leave a lasting and impactful legacy, while potentially providing substantial tax advantages for your estate.
Importance of Charitable Giving
Charitable giving at any stage in life is not just about money; it’s about kindness and making a difference. By including charitable donations in your estate plan, you can support causes you care about, like animal shelters, local schools, or medical research. Giving feels good and adds purpose to life, benefiting both you and those you help. It’s a simple yet powerful way to leave a legacy of generosity and compassion.
How Donating Impacts Taxes
Many charities qualify for tax exemption under IRS rules. The 501(c)(3) tax exemption allows qualified organizations to be exempt from federal corporate and income taxes on most revenue sources, and donors can deduct their contributions to these organizations on their tax returns. For this reason, including a gift to a qualified tax-exempt organization in your estate plan may help lower estate taxes.
In order to meet tax-exempt requirements, an organization must exist for one of these purposes:
- Charitable
- Educational
- Fostering of national or international amateur sports
- Literary
- Prevention of cruelty to animals and children
- Religious
- Scientific
- Testing for public safety
Considerations Before Giving
While giving is often more rewarding than receiving, donors considering significant charitable donations as part of their estate planning should exercise caution and consider the following points:
- Ensure that the charity you donate to is trustworthy and not a scam. Charity fraud, which involves soliciting donations for fake charities, takes various forms and is often spread through the internet, social media, and crowdfunding platforms. Before donating, thoroughly research the organization.
- Check to make sure the charity is eligible for a tax deduction. The IRS offers a search tool to verify organizations qualified to receive tax-deductible charitable contributions.
- Examine what is affordable for you. Charitable giving is not solely an activity of the rich. However, the gifts should not come at the expense of your financial security. Start with 1 percent of your income and work your way up if you can comfortably afford more.
Exploring Philanthropy Options with Law Stein Anderson
Are you considering weaving charitable giving into your estate plan? Whether new to charitable giving or looking to increase your gifts, straightforward strategies exist to maximize your contributions. Understanding charity regulations and choosing the right causes can be overwhelming, but our skilled estate planning attorneys are here to simplify the process. Contact Law Stein Anderson to schedule a consultation where we can further explore options that suit your goals.