There are many people who choose to give back to certain charities in their community throughout their lifetime. However, not everyone has the means to do so. It is because of this that they may wish to contribute after their life is over instead. This may seem like an odd notion, but it can be accomplished through charitable planning. If you would like to include charitable planning in your estate plan, contact an experienced estate planning attorney for assistance.
What is Charitable Planning?
Charitable planning can be established in different ways. This may be through the designation of beneficiaries in an estate plan, lifetime gifts, bequests in wills or trusts, and even lifetime gifts in a trust. Life insurance policies or retirement plans can be used to fund charitable gifts as well. They can be tools to provide a lifetime gift or bequest on death to charities or non-profit organizations. People tend to choose either gifting their insurance policy itself or a portion of the proceeds upon their death. This can be done through a “beneficiary designation.”
It is crucial for an individual to be aware of any tax provisions when dealing with charitable planning. For example, qualified charities do not have to pay income tax on gifts that are provided from a retirement account. It is because of this that these funds are more valuable to charities instead of other assets that come from an estate. It is important to have an estate planning attorney during this process to guide you towards making informed decisions.
What is the Function of a Charitable Trust?
Charitable planning can be done through the use of a trust. In doing so, it is important to know that there are two main types of charitable trusts that can be created in the state of New York. This includes the following:
- Charitable leads trust: This trust allows parts of the assets within the trust are distributed to charities over a period of time. After this designated time passes, the assets that stay in the trust are distributed to the beneficiaries of the deceased. This is either tax-free or with substantial tax savings.
- Charitable remainder trusts: This trust allows a portion of a person’s income to be distributed either back to the creator of a trust or the designated beneficiary. Once the creator dies, the remaining assets are given to charity.
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The Lauterbach Law Firm is proud to serve clients throughout Rockland County who are faced with legal matters related to estate planning, real estate, foreclosure defense, landlord-tenant law, business law, and criminal defense. If you require the services of an experienced team of attorneys, contact The Lauterbach Law Firm today to schedule a consultation.