Many of our clients have causes or organizations that matter deeply to them and that they want to financially support. There are many ways to incorporate charitable giving into your estate plan, and the tool you end up choosing to structure your charitable giving will depend on your own goals and finances.
Option 1: Use Your Will or Trust
You always have the option of giving assets to a charity by naming that charity directly in your will. You can also establish a trust to give money – there is a) a charitable lead trust, which allows you to donate during your lifetime while still leaving money for your heirs, and b) a charitable remainer trust, which provides income during your lifetime but gives the leftover assets to a charity at the end of the trust’s term.
Option 2: Leverage Your Retirement Account
Certain retirement accounts are eligible for charitable giving, meaning you can leave the retirement assets to a nonprofit when you die. By gifting the money in your retirement account, you both avoid a major tax penalty in your estate and allow the receiving charity to avoid paying income taxes on your gift.
Option 3: Establish a Donor-Advised Fund
A donor-advised fund, often called a DAF, is a charitable account that allows a qualifying organization (often a foundation) to distribute your funds to the community. If you use a DAF, you receive a tax deduction, and your money can grow without tax penalties. The DAF does, however, require the original donor to cede some control over how the funds are ultimately distributed.
Option 4: Create a Private Foundation
For higher net worth families, a foundation is a way to give generously while also setting up a framework for generations to come. There are significant tax benefits that come from establishing a foundation, and there are also significant opportunities for children or grandchildren to become involved in the foundation’s day to day operations.
These are four commonly used options for charitable giving, but there are many more ways to incorporate generosity into your estate plan. To find out which tool has the most impact, the best tax benefits, and the most appropriate structure to help you meet your goals, speak with a qualified Houston estate planning attorney today.
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At McCulloch & Miller, we take your goals as seriously as we take our own, because our clients matter to us. We are an experienced team of Houston estate planning attorneys with a detail-oriented and creative approach to the services we provide. If you or your loved ones need an estate planning attorney by your side, look no further than our team at McColloch & Miller.
If you would like to set up a call with one of our Houston estate planning attorneys at McCulloch & Miller, give us a call at 713-936-9073. You can also fill out our online form to tell us about yourself and have a member of our team contact you as soon as possible. Our firm covers estate planning, probate, trust administration, special needs planning, elder law, public benefits planning, and more.