Planning for Charitable Giving
The gravity of the word legacy often triggers thoughts of financial assets and property, but your legacy is much more than what you own. While property and assets are part of your legacy, so too are recipes you collected in a box, the oak you planted in the backyard, the art you created, the traditions around family and friends you establish in your home, and the park bench engraved with your name to recognize your donation and support.
Charitable Giving as a Legacy of Personal Values
An important consideration in estate planning is legacy giving, that is, charitable donations. This is an opportunity to model your values while supporting causes that matter to you. The motivation to make a charitable gift is deeply personal and varied. You may want to ensure the continuation of a charity’s mission, honor someone by supporting an organization beloved to them, or set a philanthropic example for your children. Establishing a charitable gift in your estate planning can be simple or complex.
Charitable gifts can be made during your lifetime or arranged as part of your estate plan to take effect after your death. Both options allow you to support the causes you care about, but they offer different advantages. Lifetime gifts provide the immediate satisfaction of seeing your donation at work and may offer current tax benefits, such as income tax deductions and the ability to reduce capital gains. Gifts made after death—through a will, trust, or beneficiary designation—allow you to make a lasting impact without affecting your current financial situation. Whether you choose to give now or later, charitable giving is a powerful way to extend your values, make a meaningful difference in your community, and shape how you are remembered. Planning these gifts with intention ensures that your generosity aligns with your goals and maximizes the benefit to both your chosen causes and your loved ones.
Charitable Options in Estate Planning: Simple to Advanced
Beginning with simpler options for bequeathed gifts, you can leave a gift to a charity in your will or trust. The gift can be a specific dollar amount, a percentage of your estate, or a donation of assets such as vehicles, stocks, and real estate. Another option is to name the charity as a beneficiary of a life insurance policy.
If you have specifications about how you want your charitable gift to be used, you can set up a Donor-Advised fund. These funds will be invested according to your advice, and the grants to qualified public charities will be distributed according to your recommendations. You also choose who will make decisions about the fund in the future.
If you’re looking for more advanced ways to give to charity, two options to consider are a Charitable Remainder Trust (CRT) and a Charitable Lead Trust (CLT). With a CRT, you move assets into a trust and receive annual payments from it for a set number of years or for the rest of your life. When that period ends, whatever is left in the trust goes to the charity. A CLT works the other way around. The charity receives the annual payments first, and after the trust term ends, the remaining assets go to the beneficiaries you’ve chosen—such as your children or other loved ones.
Charitable Gifts Offer Tax Benefits and Lasting Impact
Giving to charity during your lifetime offers tax benefits. These gifts may qualify for an income tax deduction, potentially reducing your taxable income and increasing the assets available for your retirement and your heirs. Additionally, gifts to charity during your lifetime remove gifted assets from your estate for federal estate tax purposes. Testamentary gifts made through your estate plan qualify for an unlimited estate tax deduction. Gifting highly appreciated property (like real estate or stocks) to a charity may help you avoid or defer paying capital gains tax.
Whether during your lifetime or through your estate, charitable giving adds a meaningful layer to your legacy. If you’re considering incorporating a charitable gift into your estate plan, speak with an experienced estate planning professional to help you navigate the options and make the greatest impact.
For more information on how Legacy Estate & Elder Law can support your Charitable Giving plans, contact us today.
The information provided is not intended to be legal or tax advice and does not constitute any attorney/client relationship. You should consult with an attorney for individual advice regarding your own situation.
Ms. Melancon is an attorney with Legacy Estate & Elder Law of Louisiana, LLC with offices in Baton Rouge, New Orleans and Lake Charles, LA. The primary focus of her practice is estate planning, probate, special needs planning, and elder law. For more information or to attend an upcoming estate planning seminar, call her office at (225) 744-0027.
