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Charitable Estate Planning in WV, KY, and OH

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Often, people wish to make charitable giving a part of their legacy. Some prefer to contribute generously to charitable organizations during their lifetimes, when they can see the impacts of donations firsthand. Others favor the option of making a charitable bequest to be distributed upon their death. Many choose a combination of both. Whatever timing you prefer, charitable estate planning can help you maximize the financial benefits of philanthropy for yourself and your heirs.

Charitable Estate Planning Offers Measurable and Intangible Benefits

People give to charity for a variety of reasons: to support charitable efforts related to their personal values or interests; to establish themselves and their families as community benefactors; and to improve the world around them, whether local or far away. Those with a compassionate spirit also enjoy some personal benefits of philanthropy, including significant tax advantages.

Donors can make contributions directly to charities throughout their lives and reap rewards in the form of tax deductions and credits. In West Virginia (WV), for example, the Neighborhood Investment Program (NIP) provides state tax credits to donors who make contributions of $500 or more to approved nonprofit organizations.

Estate giving can be executed by a simple charitable bequest in your will or a transfer on death (TOD) order. However, additional charitable vehicles are available, and choosing the correct ones for a specific situation will help benefactors maximize the tax benefits of philanthropy for their estates. Individuals and families who are considering charitable estate planning in WV, Kentucky (KY), or Ohio (OH) should contact a local attorney who is knowledgeable in the relevant state and federal tax applications of the various options available.

What Are the Benefits of Charitable Estate Planning in WV, KY, and OH?

Including contributions to charitable causes in an estate plan can help donors maximize the benefits of philanthropy during their lives and after. In addition to tax reductions and exemptions, planning ahead allows donors to better protect assets and give more generously. The satisfaction of supporting a cause you believe in, the estate planning advantages, and the benefits to the cause make charitable estate planning a win-win.

Which Estate Giving Vehicles Are Best for You and Your Heirs?

A charitable bequest in your will or a transfer on death deed can keep assets out of probate and simplify the wealth transfer process. However, there are many more options that should also be considered.

Charitable Gift Annuities

This arrangement begins with a large gift to an organization, which then agrees to pay the donor a set amount annually for a specified period of time, usually until the donor's death. When the donor does pass away, the charity retains the remainder of the gift. Estate giving through charitable gift annuities can ensure the donor's financial well-being throughout his or her life while offering benefits to the charity while the donor is living and after death.

Charitable Lead Trusts and Additional Trust Options

A charitable lead trust does exactly what it sounds like: it places donations to the charity in the front-end of the trust arrangement. The designated charity receives an annual payment until the end of the trust term, when the remainder of assets in the trust are passed to the designated trust beneficiaries.

A charitable remainder trust, on the other hand, pays the annual sum to a designated trustee, then distributes the remainder to a charitable organization when the trust term ends.

A qualified terminable interest property (Q-TIP) trust is an option for married donors who wish to provide income for a surviving spouse. Typically, Q-TIP trusts pay the surviving spouse for the remainder of his or her life, then pass assets to surviving children. However, a charity can be designated as the beneficiary of the remaining assets instead. The tax benefits of a Q-TIP trust can be significant.

Charitable Donations via Retirement Account

Retirement accounts are often among the highest taxed assets in a financial portfolio. By giving through these accounts, either before or after death, donors can minimize the tax burden placed on both the charity and the donor's estate.

Estate Giving through Donor-Advised Funds and Foundations

Donor-advised funds can be established through an investment broker or set up with a community foundation or other qualified organization. These funds allow donors to enjoy immediate tax benefits, grow the assets in the fund through investments, and maintain a level of control over the allowed use of the funds in the account.

Establishing a private foundation is another estate giving option. This vehicle probably offers the most control and flexibility for the donor, but it also requires significant administration (and, therefore, administrative cost).

Additional Considerations in Estate Giving

Whether you choose to give during your lifetime or after your death, there are important practical and philosophical details to consider. That's why any charitable bequest or significant donations you expect to make should be included in your overall estate plan. By incorporating giving in your estate plan, you can protect your income and the assets you wish to leave to beneficiaries while creating social impact and shaping your family's legacy.

Anna M. Price, an estate planning attorney with the Huntington firm of Jenkins Fenstermaker, PLLC, can help you maximize the benefits of philanthropy through charitable estate planning in WV, KY, and OH. Contact Anna today by calling (866) 617-4736 or completing the firm's online contact form.

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