An important part of estate planning for many people is making sure that their money will continue to make a difference after their death. There are several options in North Carolina to put your estate’s resources to work for charities or other organizations that mean a lot to you.
It's important to note that the specific benefits of charitable giving can depend on your individual circumstances, such as your tax situation and the charities or organizations you choose to support.
The Benefits Of Charitable Estate Planning
Charitable giving allows you to support causes and organizations that are important to you and make a positive impact on the world. Leaving a charitable gift as part of your estate plan can help ensure that your legacy lives on and that the causes you care about continue to be supported after your death.
However, there are other benefits to leaving part of your estate to a charity beyond making a meaningful impact. Some of the common benefits our clients see include:
- Tax benefits: Charitable giving can provide tax benefits, such as an estate tax deduction for the value of the charitable gift if your estate is above the limit for estate tax. In addition, if you donate appreciated assets, such as stocks or real estate, you may be able to avoid paying capital gains taxes on the appreciation.
- Supporting your community: By supporting local charities or organizations, you can help strengthen your community and provide much-needed resources to those in need.
- Fulfilling personal values: Charitable giving can be a way to align your financial resources with your personal values and beliefs. It can provide a sense of fulfillment and purpose to know that your wealth is being used to support causes that are meaningful to you.
- Setting an example: Leaving a charitable gift as part of your estate plan can serve as an example to others and inspire future generations to continue supporting charitable causes.
Making A Charitable Organization A Beneficiary
One of the easiest ways to support charitable causes and organizations you care about through estate planning is to include them in your will or trust as beneficiaries. This can be done by specifying a certain amount or percentage of your estate that you would like to go to the charity or organization.
To include a charity as a beneficiary in your will or trust, you would generally need to take the following steps:
- Identify the charity or charities that you would like to support. It is important to research and choose reputable charities that align with your values and interests.
- Determine the type and amount of assets that you would like to donate to the charity or charities. This can be a specific dollar amount, a percentage of your estate, or a specific asset, such as real estate or stock.
- Work with an experienced estate planning attorney to include the charitable gift in your will or trust. David and his team can help draft language that specifies the charity (or charities), the type and amount of assets being donated, and any other relevant details.
- Review and update your will or trust periodically to ensure that your charitable giving intentions remain current.
It is important to note that charities typically require specific information in order to process a gift. Your attorney can help ensure that this information is included in your will or trust.
In addition, it may be helpful to discuss your charitable giving intentions with the charity in advance, so that they are aware of the gift and can provide any necessary information or assistance.
Charitable Trusts In North Carolina
Another option is to create a charitable trust. A charitable trust allows you to transfer assets into a trust, which is then managed by a trustee. The trustee can use the income generated by the trust to make regular donations to the charity or organization of your choice.
In North Carolina, there are two main types of charitable trusts: charitable remainder trusts and charitable lead trusts.
Charitable Remainder Trusts
A charitable remainder trust is a type of trust that allows you to donate assets to a charity or charities, while still receiving income from the trust during your lifetime. You can choose to receive a fixed income amount or a percentage of the trust assets each year. Upon your death, the remaining assets in the trust are distributed to the charity or charities you have designated.
Charitable Lead Trusts
A charitable lead trust is a type of trust that allows you to donate assets to a charity or charities, while still retaining ownership of the assets during your lifetime. The charity receives income from the trust for a specified period of time, after which the remaining assets are distributed to your heirs or other designated beneficiaries.
Both types of charitable trusts can provide tax benefits, including income tax deductions and reduced estate taxes. However, it is important to work with an experienced estate planning attorney to ensure that your charitable trust is structured correctly and meets your specific goals and needs.
Plan For Your Charitable Giving Today
North Carolina has specific laws that govern the creation and administration of charitable trusts. For example, charitable trusts must be for a valid charitable purpose, such as the relief of poverty, the advancement of education or religion, or other charitable purposes that benefit the community. In addition, North Carolina law requires that charitable trusts be administered by a trustee who has a duty to act in the best interests of the trust and the charity.
If you are considering a charitable trust as part of your estate plan, the team here at David E. Anderson PLLC is here to help you navigate the complexities of charitable giving. Contact us today to schedule your consultation!