Charitable Giving Through Your Estate Plan

What is a charitable remainder trust?

Giving to charity is a wonderful legacy to leave behind.  With your charitable donations, you can truly make a difference to a cause that you hold near and dear.  There are many ways both during your lifetime and after your death that you can give to charity.  Charitable giving often additionally have the advantage of minimizing your taxes.  Our Irvine, California Trusts and Estate Planning attorneys at OC Wills and Trusts Attorneys discuss ways to incorporate charitable giving into your estate plan below.

Maximize Your Lifetime Charitable Donations

Those that intend to give to charity should start while they are alive.  Any amount that you donate to charity is tax-deductible from your taxable income, at up to 50 percent of your adjusted gross income when you give to a qualified charity.  You can maximize your tax savings by giving as much as possible to qualified charities annually, thereby reducing your current tax bill and ultimately allowing you to leave more to charity and your family upon your death.

Consider a Charitable Remainder Trust

A charitable remainder trust is a type of irrevocable trust, meaning that once created you cannot change your mind as to the trust’s creation.  With this type of trust, you will transfer property to the trust which you wish to donate to a charity approved by the IRS.  Approved charities will usually have tax-exempt status.  Once the trust is funded, the charity will serve as trustee of the trust and will manage and invest the assets so that it produces income for you.  The charity will pay you or your named beneficiary a portion of the income produced by the trust for a pre-determined number of years, or a lifetime.  When you die, the remaining property will go to the charity.
A charitable remainder trust comes with several major tax advantages.  You can deduct the value of your gift to the trust from your income tax over a five-year period.  Further, you will not pay estate taxes on the property when you die because the property is deemed the property of the charity.  Further, the charity is not subject to capital gains taxes.  This means that should the charity sell assets within the trust to convert them to income producing assets, you and the charity will not be subject to potentially costly capital gains taxes.
Consult with an estate planning attorney to find out more about how you can use your estate plan to not only provide for your family, but also give back to the world.  Charitable giving can become a significant part of your lasting legacy.

Brian Chew, the managing partner of OC Wills & Trust Attorneys, has extensive experience in the areas of estate planning, asset protection planning, business succession planning, long-term care planning, and veterans’ benefits. By devoting his practice to estate planning matters, he has founded a firm that strives to provide exceptional service to their clients by working closely with individuals and their families to create comprehensive and customized estate plans. For the past twenty five years, Brian has served thousands of clients in the matters of estate planning, wills and trusts. If you have any questions about this article, you can reach Brian Chew here.