Planning Your Estate – Charitable Donation Options

When it comes to being responsible, part of this involves planning out one's estate. When the person dies, there will be assets and money left behind that have to go somewhere. If the person cares anything about where his or her financial wealth ends up, it will be of the utmost importance to acquire services from an experienced estate planning attorney.

In most instances, to reduce tax burdens often associated with distributing wealth, it will be wise to include a wide variety of charitable donations within one's estate plan. Donating to charity can lessen tax burdens by more than several hundred thousand dollars.

It should be noted that money given through charitable donations is not tax exempt – however, a charitable contribution deduction can be obtained. There are two main terms that need to be learned when it comes to understanding donating to charity:

There are three charitable donation options that are most commonly sought after by people – these options include:

Charitable remainder trusts: Through this type of option, a person is given the opportunity to turn an extremely valuable asset into lifetime income. The asset given proves to be valuable to the organization that it is donated to. However, for the donor, it allows him or her to reduce income and estate taxes.

Charitable lead trusts: This option enables a person to transfer the ownership of one or more assets to a public charity, or if preferred, to a private foundation. The transfer of ownership can take place while the person is alive or after death takes place. The ownership is only transferred for a certain number of years. After the time expires, the interest remaining is then transferred to beneficiaries.

Private charitable foundation: When giving to private charitable foundations, the gifts are deductible for both estate tax and federal gift purposes. Most private charitable foundations are managed by a group of trustees. The purpose behind a private charitable foundation tends to be related to any of the following: religion, education or social.

It needs to be remembered that advice relating to charitable donations needs to come from an experienced estate planning lawyer who has an extensive amount of knowledge relating to tax and estate law. Through a careful assessment, an estate planning attorney can create for a client the best possible estate plan to follow, which will allow for wealth to be distributed in a way in which taxes won't eat it up.

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