As each year comes to a close, many engaging in wealth transfer planning also want to advance causes close to heart in ways that maximize tax advantages. A reminder about charitable giving comes early in the month on Giving Tuesday, the first Tuesday after Black Friday. Giving Tuesday is a day to remember the power of charitable giving and to take action in your charitable gift planning. Using the right tools, such as charitable trusts, you can maximize the benefit for the charity and secure tax advantages for yourself, preserving wealth for future charitable giving and your heirs. As you wind up the calendar year, consider how charitable trusts may be the ideal vehicle for your purposes.
How Trusts Help with Charitable Gift Planning
Charitable trusts provide tax advantages that help maximize your giving and wealth transfer dollars. Depending on the type of charitable trust used, this vehicle for charitable giving and wealth transfer can be an invaluable part of your estate plan for lifetime and/or after-death giving. Trusts can shelter assets from creditors, be managed to grow asset value, and provide payment streams or lump-sum transfer of significant assets to charitable, family beneficiaries, or back to the donor. With Giving Tuesday on the horizon, we are reminded of the additional impact our generosity could have if we use the right tools.
What Is Giving Tuesday?
Giving Tuesday is a global movement that reminds us of the power we have to transform the world through charitable contributions. Created in 2012, the Giving Tuesday organization seeks to encourage people to do good, whether through acts of kindness or charitable giving. The organization provides resources to help develop giving campaigns, participate in a local fundraiser, or engage in individual charitable giving.
Giving Tuesday is not intended to be just a once-a-year event, nor is it limited to early December. During the pandemic in 2020, charitable organizations were struggling, so West Virginia and Kentucky both recognized Giving Tuesday in May. But the fixed date, falling on the first Tuesday after Black Friday and Cyber Monday, reminds the world of the power and place charitable giving has in the global community.
The Benefits of Charitable Gift Planning Using Trusts
Giving Tuesday is a symbol of the continual need for contributions to charitable causes. Requests for giving may inspire spur-of-the-moment donations, but a strong desire to make a significant contribution to a worthy cause requires careful planning.
The federal government has recognized the benefits of charitable giving and encourages such contributions through tax benefits. As a result, when properly documented and employed, charitable trust options provide a tax-reducing means to share your wealth for the benefit of charities and serve as a means for transferring your wealth to loved ones. The specific tax benefits for planned giving depend on the charitable trust or other device used for making the donation but usually include one or more of these benefits:
- Overall tax deductions;
- Reducing taxes on a windfall;
- Minimizing or eliminating capital gains tax; and
- Reducing your total taxable estate
Charitable trusts are an excellent option for many who desire to include planned giving in their estate plans. Following are types of charitable trusts that may be the ideal vehicle for both charitable giving and wealth transfer planning:
- Charitable lead trusts;
- Charitable remainder trusts;
- Donor-advised funds;
- Pooled income funds;
- Charitable gift annuities; or
- Family foundations
In choosing from several types of charitable trusts available, a charitable trusts attorney can help you stretch your donation and wealth transfer dollars.
How a Charitable Trusts Attorney Helps with Charitable Gift Planning
Planned giving is an ideal way to meet goals for charitable giving and wealth transfer planning, but finding the right vehicle requires guidance from experienced professional advisors. Choosing the wrong tool for making your contribution or having the right vehicle poorly prepared using the wrong documentation can do more than frustrate your goals—it can cost you money. To ensure that your donation does the most good for both charitable and estate planning goals, rely on advice from an experienced trusts and estate planning attorney.
Anna M. Price at Jenkins Fenstermaker, PLLC is a leading charitable trusts attorney for estate planning, planned giving, tax planning, and trusts. For experienced guidance to help you choose the optimal vehicle for estate planning, wealth transfer planning, and charitable gift planning, call Anna for a consultation at (304) 523-2100 or complete this online contact form.