Charitable Planning in Pennsylvania

Many people love to give back to their community during their life. Sometimes, they even like to do so after their life is over. This can be accomplished through specific creations in an estate plan. If you would like to include charitable planning in your estate plan, it is beneficial to retain the services of an experienced attorney for assistance. 

What is Charitable Planning?

There are many different ways in which charitable planning can be carried out. This can include the designation of beneficiaries within an estate plan, lifetime gifts, bequests in wills or trusts, and even lifetime gifts in trusts. In addition to this, a life insurance policy or retirement plan can also be used to fund charitable gifts. A person’s life insurance policy can be used as a tool to provide a lifetime gift or bequest on death to certain charities or non-profit organizations. Usually, people have the option of either gifting their insurance policy itself or a portion of the proceeds upon their death. This is done through a “beneficiary designation.”

When dealing with charitable planning, it is important to be aware of any tax provisions. Qualified charities are not required to pay income tax on gifts that are provided from a retirement account. This makes these funds valuable to charities as opposed to other assets that may come from an estate. Those who wish to include charitable planning in their estate should review different tax provisions on certain gifts. An estate planning attorney can be beneficial to have during this time in order to guide you through the process and ensure you are making an informed decision.

What is the Function of a Charitable Trust?

There are two main types of charitable trusts that an individual can create in the state of Pennsylvania. This includes the following:

  • Charitable leads trust: This is when parts of the trust assets are distributed to charities over time. After a designated period of time passes, the assets that remain in the trust are distributed to the deceased’s beneficiaries either tax-free or with significant tax savings. 
  • Charitable remainder trusts: This is when a portion of the individual’s income is distributed back to the creator of a trust, or the designated beneficiary of the trust. Once the individual passes away, their remaining assets will be given to charity. 

Contact our Firm

Friedman Schuman is an experienced and dedicated legal resource for clients throughout Pennsylvania. We proudly serve clients facing a wide range of legal matters. If you require the services of an effective attorney, please contact Friedman Schuman today to schedule a consultation.