Incorporating Charitable Giving
How to include charitable giving in your estate plan by ShareLove.Fund’s Rainbow Women Social Enterprise endeavor and sponsored by your generous donations.
Estate planning in layman’s terms is deciding how assets are passed down from one generation to another. Simply put, it means you get to decide how your property, vehicles, money and investments are going to be distributed after your death. Without proper estate planning, your assets may not go to those loved ones that you want them to go to.
Estate planning can be about more than just divisions of assets; it can be your legacy, what you leave behind in this world after you’re gone. If you want to leave a lasting impression charitable giving should be a part of your estate plan. There is, of course, the practical consideration of tax benefits but there is also the intangible – the benefits you leave behind for those in need and how you help improve their lives – your legacy.
So how do you incorporate charitable giving in your estate plan? Let’s take a look at what you need to do.
Choose the Right Cause–The first step and the most obvious one is to choose a cause close to your heart. If you have a history of charitable contributions, go over and find one that you are passionate about. If not, ask yourself questions. What issues are of concern to you in your community? What do you want future generations to have? What do you want your legacy to be? On the practical side – how much can your estate support? These questions may not cover all the topics but they do give you a starting point.
Decide What Assets to Give –Once you’ve made a decision about what goals you want your charitable giving to achieve, the next step is to decide which assets you will utilize for it. The easiest, of course, is cash. If you’re looking at smaller charities, this is the best option for you. Larger charities can sometimes accept donations in the form of appreciating assets such as securities, artwork and real-estate.
Decide How to Make the Gift – Are you going to give the gift directly to an organization or are you going to go via community foundations and donor advised funds. The latter have the added benefit of having expertise in dealing with different kinds of donated assets but you may not have much control over where your money goes. You can also give to charitable remainder trusts, private foundations and charitable lead trusts. Doing this can help reduce a significant percentage of transfer taxes.
It is very important to plan your estate since life is uncertain. No one can foresee what happens in the future. It is important that you sit with someone who is an expert in estate law and tax planning so that you can direct your assets towards the goals that you consider the worthiest while at the same time determining which solutions are more advantageous for you and your heirs.