What should I know about charitable planning for my estate?

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Many perpetuate the idea that only those who are incredibly wealthy can give back to charity. However, this is far from the truth as many average citizens have their estate planned to give back to charities upon their passing. If this is something you’re interested in doing, understanding how to proceed is critical. The following blog explores what you must know about charitable planning for your estate and how Pennsylvania estate planning attorneys can help you ensure your wishes are met.

What is charitable estate planning?

Charitable planning is a way for individuals to give back to beneficiaries, charities, and organizations as part of their estate plan to be distributed during their lifetime or upon their passing. This is ideal for those who wish to donate a portion of their estate to charity.

What are the benefits?

Charitable planning, though different from a mutually beneficial transaction such as investing in a charity, does have benefits for the donor. These include tax deductions, which allow you to make larger donations as a portion of the gift will not be taxed. Similarly, you can avoid capital gains taxes, because the assets held in charitable planning trusts will protect asset appreciation, which helps create additional income for beneficiaries.

Not only does charitable planning have tax benefits for donors, but it also helps you create a lasting legacy. By giving back to charities you hold near and dear to your heart, you can make a difference in the world.

What options do I have if I want to include charitable planning in my estate?

Generally, there are two common options for those looking to incorporate charitable planning into their estate. These are a charitable lead trust and a charitable remainder trust.

A charitable lead trust allocates certain assets to a charity or organization of your choosing over a period of time. Once the time has elapsed, the remaining assets are distributed to the beneficiaries named in the trust.

A charitable remainder trust works in the opposite. A portion of the income is given back to the trustor or a beneficiary, and upon the trustor’s passing, the remainder of the assets are given to a charity.

Each of these options has pros and cons, so it’s in your best interest to enlist the assistance of an experienced attorney to help examine your wishes and finances to determine the best option for you.

As you can see, charitable planning for your estate can be complex. However, this should not deter you from giving back! If you wish to creat a charitable plan, enlisting the assistance of the dedicated team at Friedman Schuman is critical. We will work with you to ensure you understand your options so you can feel confident in the choices you make. Contact us today to get started.

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