The Dean Law Firm Blog

Wednesday, June 17, 2015

Charitable Giving While Providing for Your Family

Do you enjoy giving to charity, but worry that if you give to charity in your Will or Trust, that doing so may cause you not to provide for your family in the way you would like? The beauty of Estate Planning is that it allows you to choose from a variety of options to tailor your plan to your wishes and particular situation.

By planning ahead, you can take advantage of the benefits of incorporating charitable giving into your estate plan while also ensuring a legacy for your family. For example, estate planning that contains charitable giving may help you save on income and estate taxes, provide a meaningful contribution to the charity of your choice, and even guarantee a steady stream of income to your family.

One of the most common tools is the Charitable Remainder Trust (CRT). The CRT provides the beneficiary the ability to receive income for his or her lifetime, or for a set period of years. At death, or the conclusion of the set period, the “remainder interest” held in the trust is transferred to the charity you have chosen. You receive a tax deduction based on the calculated remainder interest that will be left to charity. This remainder interest is calculated according to the terms of the trust and the Applicable Federal Rate published monthly by the IRS.

The Charitable Lead Trust (CLT) follows the same basic principle, in reverse. With a CLT, the charity receives the income for a set period of years, with the remainder interest transferring to your heirs upon his or her death.

With several ways to incorporate charitable giving into your estate plan, it is important that you carefully consider the benefits and consequences, taking into account your assets, income and desired tax benefits.

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