There is estate planning, and then there is legacy planning. When you engage in legacy planning, you give careful consideration to the way that you will be remembered after you are gone.
A legacy plan can include acts of charitable giving. When you help worthy causes, you enjoy personal rewards, and you will be leaving a lasting impact that can be felt for an extended period of time.
There are various different ways that you can give to charitable causes, and a private charitable foundation is one option.
It can seem as though this is the exclusive realm of billionaires, because of the existence of foundations like the Bill and Melinda Gates Foundation and the Rockefeller Foundation. However, perhaps surprisingly, most of the foundations in the United States are funded with less than $1 million.
Donor advised funds are another option. With this type of fund, you can make a single contribution, but the fund can ultimately assist multiple different charities with the resources that you contributed into it.
Private foundations can be costly to administer, but the administration costs are spread among many different donors if you contribute into a donor advised fund, so the administrative costs are relatively minimal for each donor.
Charitable Remainder Trusts
You can also use a charitable remainder trust to support a charity. With the charitable remainder trust called the charitable remainder unitrust, a non-charitable beneficiary receives a fixed percentage of the value of the trust each year. The person creating the trust would generally act as the non-charitable beneficiary. The percentage must be at least five percent and no more than 50 percent.
When you create the trust agreement, you also name a charitable beneficiary. This beneficiary must receive at least 10 percent of the value of the assets that are contributing into the trust.
There is a different type of charitable remainder trust called a charitable remainder annuity trust. With this type of trust the non-charitable beneficiary would receive a fixed sum each year rather than a percentage.
Giving is its own reward on one level, but there are a number of different tax advantages that you can gain if you create a charitable remainder trust. You are removing assets from your taxable estate, you get a charitable deduction, and you can also save on capital gains taxes if you take the right steps after contributing appreciated assets into the trust.
Schedule a Consultation
We have just scratched the surface in this blog post. If you would like to discuss charitable giving with a licensed professional, our firm can help.
We offer free consultations, and we would be glad to answer all your questions. To set up an appointment, send us a brief message through this page: Grand Forks ND Legacy Planning.
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