Tag: charity

The Benefits of Direct Lifetime Gifts to Charity

When you make gifts to charity during your lifetime, you benefit both the charitable organizations and your estate. Not only can you receive tax deductions, you also reduce the size of your taxable estate.

What Is a Direct Lifetime Gift to Charity?

Giving directly to a 501(c)(3) nonprofit or other qualified charitable organization is a lifetime gift to charity. Anyone can make this kind of gift in any amount – in fact, donations can be in the form of cash, supplies, real estate, or other items that benefit the organization. Making a lifetime gift alternatively could involve starting a foundation, setting up a donor advised fund, or some other method of giving over time.

Available Tax Deduction

“501(c)(3)” refers to the section of the tax code that permits tax deductions if you made donations to qualified nonprofits during that tax year. You need to keep track of the amount and type of your donations to receive the deduction. In addition, you usually will receive a tax benefit from the deduction only if you itemize your deductions on your tax return. Still, many people take advantage of this deduction to reduce their overall tax liability.

Effect on Taxable Estate and Estate Tax Liability

In addition to the effect on yearly tax liability, lifetime gifts also benefit your estate. The IRS assesses estate taxes on estates of deceased people that are valued above a certain amount (currently about $11.2 million). Estate taxes are very expensive and can decrease the amounts that designated heirs actually inherit from an estate. As a result, decreasing the size of your potentially taxable estate during your lifetime can reduce estate tax liability sometime in the future.

To elaborate, people with substantial or particularly valuable assets can take advantage of lifetime giving. By making gifts to the nonprofits or charitable organizations during their lives, they reduce the total value of their assets. This translates to a smaller estate when it comes time to assess estate taxes. If the gifts lower the estate value enough, no estate taxes will be due. Generosity during your lifetime could also be smart estate planning for the future.

Want to start planning your estate? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.

How Can You Make Charitable Giving Part of Your Estate Plan?

If you would like to make charitable giving part of your estate plan, you have many options. Not only does charitable giving help organizations and people in need, it also can benefit you and your estate.

Options for Charitable Giving

Depending on how much money you have to give, which organizations you want to give it to, and your timeframe for giving, you can choose from among several different types of estate planning structures. For example, you could set up a charitable trust, start a foundation, contribute to a donor-advised fund, or give directly.

Charitable Trust

There are two basic types of charitable trusts: ones that give to family now and charity later, or ones that give to charity now and family later. In either case, interest or dividends from trust assets goes to the current beneficiaries during your lifetime. After you die or after a set term of years, the remainder beneficiaries receive the rest of the trust assets.

Foundation

Some people with substantial assets to give to charity decide to start foundations. Foundations operate for the benefit of a charity, a group of charities, or a certain cause. Once a donor leaves assets to a foundation, they are no longer in his or her estate or under his or her control. Instead, a board of directors and staff decide how to use the funds.

Donor-Advised Fund

Similar to a foundation, a donor-advised fund allows you to benefit charities of your choice by giving assets to a managed fund. The assets get invested, earning interest and dividends. At set points in time, the fund makes gifts to the charities that you chose. While you do not have control over the assets, you do control which charities ultimately receive them.

Direct Gifts

Many people choose to simply make direct gifts of money or assets to charitable organizations or non-profits. You may receive tax deductions for these charitable gifts in the years that you make them. In addition, the gifts reduce the value of your taxable estate.

Want to start planning your estate? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.

The owner of this website has made a commitment to accessibility and inclusion, please report any problems that you encounter using the contact form on this website. This site uses the WP ADA Compliance Check plugin to enhance accessibility.