What is Charitable Planning?

If you are an individual seeking to give gifts or donate to religious institutions, schools, or other community-based organizations, you are most likely considering charitable planning. In many cases, if someone does not have sufficient funds to donate in their lifetime, they may be able to do so in their estate plan. Charitable planning is an honorable and meaningful thing to do, as there is nothing more important in life than giving back and paying it forward. If this sounds like something that interests you, here are some additional questions you may have regarding charitable planning:

What tools are available to fulfill my charitable planning wishes?

Fortunately, you have several different options. You may fulfill your charitable planning wishes through lifetime gifts, bequests in wills or trusts, beneficiary designations on death, and lifetime gifts in trusts. You may also use your life insurance policy or retirement plan as a source of funds for charitable gifts. You may use your life insurance policy for lifetime gifts or bequests on death to provide for a charity or non-profit organization. You may gift the life insurance policy itself, or you may gift all or a portion of the proceeds upon your death through a beneficiary designation. 

Qualified charities do not pay income tax on gifts from retirement accounts, so the funds in some of these plans may be more attractive as gifts to charities than other assets in your estate. Additionally, if you are 70.5 years or older and are considering lifetime gifts, you may wish to review specific tax provisions when deciding the source of funds you will use for those gifts. You may also set up a trust that will benefit charities of your choice.

How do I set up a charitable trust?

The two main types of trusts are called charitable lead trusts and charitable remainder trusts. Essentially, in a charitable lead trust, portions of the trust assets are paid out to charities over time. After a specific amount of time, the remaining assets left in the trust will go to your beneficiaries either tax-free or with significant tax savings. In a charitable remainder trust, however, after the trust is established, a stream of income is sent back to the creator of the trust or a designated beneficiary. Upon the individual’s death, the remaining assets go to charity.

Contact our California firm

Working with an experienced estate planning attorney, such as Jaci Feldman of the Woodland Hills, California, Law Office of Yacoba Ann Feldman, will ensure that you are taken care of when you need it most. Contact The Law Offices of Yacoba Ann Feldman to schedule a consultation today.