Have you thought about leaving money to charity after you pass away? Doing so can have many benefits. Not only would you have the satisfaction of knowing that you are supporting a worthy cause after you are gone, but donating estate funds can provide certain financial advantages.
First, helping those in need may be among one of the most rewarding things anyone can do. Maybe your donations will help find a cure for a terrible disease or provide opportunities for disadvantaged children. More and more, people are leaving gifts to organizations that provide care for abused and abandoned animals. There is no shortage of honorable pursuits, and you cannot take money with you in the end.
Your family, however, can. In other words, assets given to charity may be assets diverted from your prospective heirs.That does not have to be a zero-sum dynamic. For example, if the value of your estate exceeds the applicable threshold for an estate tax exemption, then donating a proportionate piece of your estate to a tax-exempt charity could reduce its overall value and likely spare your family a significant tax bill.
People with moderately sized estates can also benefit, as they often overlook the potential for appreciating assets to put them at risk of an estate tax down the road. Additionally, highly appreciated assets can involve large tax liabilities once they are redeemed. In both cases, donating them to a charity may protect your estate, benefit your family members, and help a charitable organization that receives favorable tax treatment.
Another way to donate to a charity without penalizing your heirs can be to establish a percentage of giving in your estate documents rather than a numerical dollar amount. By leaving a percentage, you can rest assured that your charitable gift(s) can be proportionate to your estate design regardless of market fluctuations and increasing or decreasing asset values. Your loved ones may feel comforted knowing that their inheritance may not be overtaken by circumstances that could lead to outsized giving.
It can be important to balance your income needs and the needs of your loved ones in conjunction with charitable giving. Contact us to schedule a meeting with attorney Alan Hougum where we can discuss your questions and concerns.
