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Charitable Donations: Leaving a Legacy

Charitable Donations: Leaving a Legacy

Many individuals view their legacy as more than the accumulation of financial assets. They want to be remembered for their charitable giving, for helping others, and for making an impact on society. Many people give meaningful gifts of all sizes or volunteer for all sorts of causes.

Here's a non-exclusive list of ways to give charitable donations:

In kind. You may contribute your time or expertise to a charitable organization. In doing this, you get direct experience with the charity and how it uses its resources. That can be vital in determining whether it is a good use of your time and money later on.

Directly. Such gifts can be made during life, or through a Will or Trust. This may be a good option for any client, especially for those with smaller gifts.

Retirement account gifting. A client can name a charity as a beneficiary to his IRA or employer-sponsored retirement plan. However, certain rules such as spousal approval often apply.

A charitable lead trust. This trust pays income to a charity chosen by the donor for a specified duration. It must be irrevocable and may be set up during life or at death. After that term, the trust principal passes to family members or other beneficiaries.

A charitable remainder trust. This is the reverse of a lead trust because trust income is payable initially to the grantor or other non-charitable beneficiaries for the term of the trust. After that, the principal goes to the donor's chosen charity. Again, this may be set up during life or at death.

Set up a private foundation. Individuals can make tax-deductible donations to a private foundation. Donations may be made during life or at death.

There are various benefits to making charitable donations, including leaving a charitable legacy and tax deductions—both income tax deductions and potentially transfer tax deductions. The federal estate tax provides a deduction for charitable donations. Additionally, charitable gifts made during a person's lifetime reduce that person's taxable estate, also reducing the ultimate estate tax bill.

Leave more than your financial wealth to your children; leave a legacy. Contact us at Atlantis Law to speak to an estate planning attorney who can help you find and create the best option for your charitable donations.

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