When Preparing your Estate Plan,  Beneficiaries Do Not Have to be Limited to Friends and Family.

Estate planning is not a one-size-fits-all approach to asset distribution. Every individual has unique life experiences, and those experiences can create different ideas. For some, charitable giving is a great option to include in their estate plan.
Charitable giving offers the dual benefits of providing for an organization whose ideals and work you support while making use of tax requirements to maximize the benefits for everyone involved.

Plan Ahead

First and foremost, every estate plan should be created with care and attention to detail. Using a qualified estate planning attorney like Dan Hill of Johnstown, PA, is a good start. Estate plans should not be treated as a last minute decision. Rather we should create a plan early in life and update it over the years as our lives change. Marriage, children, aging parents, and accumulation of money and assets all have an effect of how we will distribute assets over the course of our lifetime.
estate planning and and beneficiaries discussion with lawyer

One thing that may occur in one’s life is an interest and involvement in a particular cause. Think Betty White and her love of animals. She supported the Best Friends Animal Society for over 20 years and likely included this charity in her estate plan.  If you decide to include charitable giving in your estate plan, you will want to specify exactly which charity you intend to include in your estate plan.

Once you’ve got the right organization, you will need to specify exactly how you intend to include them as a beneficiary.

Charitable Options

Appreciated Stock

If you own any stock that has seen an increase in value, that stock gets referred to as “appreciated stock.” Selling appreciated stock requires you to pay taxes for the capital gains of the appreciation. But if you elect to donate that appreciated stock to a charity, the charity can turn around and sell that stock without paying the capital gains taxes. Plus, you get a tax deduction.

Charitable Remainder Trust

A charitable remainder trust, or a CRT, allows an individual to name a charity as a beneficiary. This option allows the charity to receive regular disbursements from the CRT for a given time frame. The rules about how much the individual receives from the CRT and the length of time for receiving those funds can vary, but those rules will also need to be specified. And just like a charity with proper organization and operation, the CRT itself will also be tax-exempt.

Named as a Beneficiary

Just like you can choose to name specific people as beneficiaries in your will or trust, you have the option of naming a charity or organization as a beneficiary.
When considering this option, keep in mind the funding amount or asset distribution might be required to submit to the probate process before the organization can receive the intended assets. If you decide to leave $100,000 to the Shriner’s Organization but owe a debt of $10,000, the intended amount may end up being smaller once the debt gets settled. On the other hand, the charity’s tax-exempt status will negate any income taxes that would have to be paid for withdrawing funds left to the charity through your retirement account.
Want to learn more about how to include charitable giving within your estate plan? Contact The Hill Group LLC today.