Our Attorneys Can Help You With Your Charitable Giving
An effective way to easily cut down on estate taxes, as well as effectively protecting family assets, is to engage in charitable giving and charitable planning. In fact, a charitable plan with thoughtful tax aspects can allow you support causes you have a passion for, while at the same time allowing you to pass along family values, leaving behind a legacy you can be proud of. Contingent upon the type of charitable planning you choose to engage in, you will remove an asset from your taxable estate, ensuring a significant tax deduction is received, and even guaranteeing benefit income protection. At Family Estate Planning Law Group, we will assist you with:
- Structuring your chosen plan for maximum tax advantage;
- Planning and implementing a charitable giving strategy, and
- Selecting the top tax-favored assets for charitable giving.
At FEPLG, we will assist you in making determinations regarding giving to charities of your choice, ensuring you are simultaneously reducing tax burdens, which can impact the future of your family. One major way we can help you engage in charitable planning—which few people are aware of—is:
Making charitable donations through life insurance. Life insurance can not only ensure your family is taken care of after your death, it can aid in supporting a favorite charity as well. When it is structured in the right way, life insurance can allow your money to grow tax-free, later to be transferred to your beneficiaries tax-free as well. Simultaneously, your estate will receive a charitable deduction for the amount of the proceeds upon your death. Using your life insurance for charitable giving can have many benefits, such as:
- You can transfer your insurance contract to your favorite charity. You will receive an income tax deduction this year while setting the stage to leave a generous legacy behind.
- You are allowed to make much bigger contributions through life insurance than in outright cash or appreciated properties.
- You can have a policy donation set up for the charity of your choice—you gift the life insurance policy, pay less in estate taxes and reap a significant income tax deduction of the fair market value of the life insurance policy.
- You can receive dividends paid to your life insurance policy, donating them to charity. You can deduct the benefits form your taxes, and if you happen to own a corporation, this is a good way to receive tax and community benefits.
- You can simply name your chosen charity as your beneficiary. Your estate will be reduced by the amount of the death benefit.
- If you have contentious relationships with family members, the proceeds of your life insurance policy will be paid confidentially when it is set up as part of a trust—meaning your family members do not need to know your intentions, either before or after your death.
Other Methods of Engaging in Charitable Planning
Other ways you can engage in charitable planning include:
- A donor advised fund can be used as an alternative to a private foundation when the family seeks less control and more assistance in the administration of the charitable gifts and reporting requirements.
- A charitable lead trust creates an income stream to charity for a term of years with the remainder of the trust going to your children with no estate or gift tax consequences—when properly designed.
- A private foundation offers you the considerable freedom to control amounts given by placing restrictions on how your gifts are used by charities so you and your family can ensure your charitable gifts are used in the manner you intend.
- A charitable remainder trust or a charitable gift annuity which will give you an immediate income tax deduction, a lifetime stream of income, and a waiver of capital gains taxes owed on contributed property at the time of the sale of the assets contributed. This technique works with highly appreciated stock.
Deciding How to Engage in Charitable Giving During the Estate Planning Process
Perhaps you have begun your estate planning process or are still thinking about it. You may have been thinking about what your legacy will be after your death. Perhaps this is the time to consider setting and achieving charitable giving goals—both during your lifetime and for many years following your passing. While philanthropy is sometimes prompted by tax issues, charitable giving can benefit both individuals and family members from a legacy and generational-connection perspective. This perspective may be a point of interest during your estate planning process.
First, you will decide which cause, or group of causes, is the most significant to you. If you have often given charitable contributions in the past, review those donations to help you discover where your true passions lie. Answering a few questions can help you decide which charity or charities you are interested in giving to. As an example, how do you wish to be remembered? What specific issues within your community interest or concern you? What is your primary worry for future generations? This can help you identify your priorities, values, and passions, which in turn will help you determine what you want to achieve with your estate planning.
Once you have determined who you want to give to, you will then decide what you want to give, and whether you will donate some assets now, or in the future, after your death. Obviously, cash donations are almost universally accepted, although other assets such as real estate, artwork, and even privately held securities can also be gifted to your favorite charity. Donating highly appreciated assets to a charity can effectively help you realize significant tax savings. Charitable lead trusts, charitable remainder trusts, and private foundations, along with life insurance proceeds, are all effective ways to give charitably while minimizing taxes.
How Family Estate Planning Law Group Can Help
Paying taxes to the government allows them to choose how to spend or allocate our tax dollars, whether through government-sponsored programs or spending for society. We offer our clients planning designs which help them reallocate their social capital to programs and causes they believe in and wish to support. Our clients are thus given the benefit of knowing whom the money will benefit and how it will be used; we help our clients make charitable gifts consistent with their values and beliefs in the most tax-efficient manner.
If your goal is to leave behind a legacy, we at Family Estate Planning Law Group can encourage and assist your giving to charitable causes. Along with the personal rewards you gain when making a charitable gift, most charitable gifts provide a corresponding income tax deduction. Some of the charitable giving strategies we can help you set up can save capital gains taxes, increase income, help diversify stock portfolios and provide you or a person you designate, with an income for life.
Some types of split-interest gifts can provide an estate tax deduction as well. We serve families throughout Lynnfield, Wakefield, Reading, Peabody, Danvers, Beverly, Greater Boston, North Shore, and the Southern New Hampshire area. If you want to take advantage of charitable planning and the associated tax savings, it is time to speak to an experienced Family Estate Planning Law Group Attorney who can guide you through the entire process. Contact FEPLG today.