Legal Blog

Including Charitable Giving in Your Estate Plan

 

By Maurice Offit

Choosing the Right Instrument to Accomplish Your Objectives

“Give and you shall receive.” This familiar adage also describes charitable giving in an estate plan. First, you reap a personal reward by supporting a social cause, your alma mater, people in need, the environment, the arts or enumerable other issues that are close to your heart. In addition, charitable giving will help you minimize estate taxes that may otherwise be due at your death.

Charitable Trusts

You can donate to a non-profit entity via a straightforward testamentary gift in your will or you can establish a charitable trust and make your donation to the trust. Although a direct gift is the easiest option, remember that once you make the donation, the funds belong to the charitable organization. A trust, on the other hand, provides that the charitable organization will receive payments from the trust, but the trust will also make payments to members of your family. There are two types of charitable trusts — charitable remainder trusts and charitable lead trusts.

Charitable Remainder Trust

Charitable remainder trusts are appropriate for people who want a charitable organization to receive a donation in the future, rather than today, as chartable remainder trusts provide that: For a specified period time, the trust will make a payment each year to one or more members of your family. At the end of the specified period of time, the funds remaining in the trust will be paid to the charitable organization. For example, your will could provide that at the time of your death, $100,000 will be given a charitable remainder trust and the trust will pay $7,000 each year to your children for a period of twenty years after your death. Then, at the end of the twenty-year period, the funds remaining in the trust shall be paid the charitable organization.

Charitable Lead Trusts

Charitable lead trusts are the opposite of charitable remainder trusts and are appropriate for people who want a charitable organization to receive a donation now — rather than later — as charitable lead trusts provide that: For a specified period time, the trust will make a payment each year to the charitable organization. At the end of the specified period of time, the funds remaining in the trust will be paid to members of your family. For example, your will could provide that at the time of your death, $100,000 will be given a charitable lead trust and the trust will pay $7,000 each year to a charitable organization of your choice for a period of twenty years after your death. Then, at the end of the twenty-year period, the funds remaining in the trust shall be paid to members of your family. Charitable trusts are not a one-size-fits-all proposition; you need to tailor the trust to meet your goals. A qualified estate planning lawyer can advise you on the best means of incorporating charitable giving in your plan, in addition to helping you draft an instrument that reflects your objectives.

ABOUT MAURICE OFFIT

Maurice Offit elevatorpitch_meetme moffit@offitkurman.com | 301.575.0308 Maurice Offit is an estate planning attorney, co-founder of Offit Kurman Attorneys at Law and a member of the firm’s Management Committee. Mr. Offit counsels a large number of clients who share an interest in minimizing estate taxes and asset protection from the claims of creditors.   You can also connect with Offit Kurman via FacebookTwitterGoogle+YouTube, and LinkedIn. and LinkedIn.