As a millennial parent, you likely have a lot on your plate. Between juggling work, family, and personal responsibilities, it can be tough to think about estate planning. However, taking the time to create a comprehensive estate plan is crucial, especially when it comes to charitable giving.
Charitable giving can provide a number of benefits, both to the organizations you choose to support and to your own family. Not only can charitable giving help you leave a positive impact on the world, but it can also reduce the overall tax burden on your estate.
If you're interested in including charitable giving in your estate plan, there are a few different approaches you can take. Here are some of the most popular options:
1. Bequest in Your Will or Trust
One of the most common ways to include charitable giving in your estate plan is by making a bequest in your will or trust. A bequest is simply a gift of money, property, or other assets that is made after your death.
When making a bequest to a charitable organization, you can choose to either leave a specific dollar amount or a percentage of your estate. This allows you to support causes that are important to you while still ensuring that your loved ones receive the inheritance you intend for them.
2. Charitable Remainder Trust
Another option for charitable giving is to create a charitable remainder trust (CRT). With a CRT, you transfer assets into a trust, which then pays out income to you or your designated beneficiaries for a set period of time.
After the trust period ends, the remaining assets are distributed to the charitable organization of your choice. Not only can this approach provide tax benefits, but it can also allow you to receive income from the trust during your lifetime.
3. Charitable Lead Trust
A charitable lead trust (CLT) is similar to a CRT in that it involves transferring assets into a trust. However, with a CLT, the income generated by the trust is paid out to a charitable organization for a set period of time, with the remaining assets then distributed to your designated beneficiaries.
This approach can be particularly beneficial if you want to support a specific charitable organization during your lifetime while still providing for your family in the long term.
4. Donor-Advised Fund
A donor-advised fund (DAF) is a charitable giving vehicle that allows you to make a charitable contribution and then recommend how those funds are distributed to various charities over time.
By contributing to a DAF, you can receive an immediate tax deduction while still retaining the ability to choose which organizations receive the funds. This can be a great way to make charitable giving a more integrated part of your overall financial plan.
5. Family Foundation
If you're interested in creating a lasting legacy of charitable giving, a family foundation may be a good option for you. A family foundation is a charitable organization that is established and funded by a family or individual.
By creating a family foundation, you can establish a long-term charitable giving plan that involves your entire family. This can be a great way to pass on your values and create a lasting impact on the causes you care about.
Other things to consider
When deciding which approach is best for your estate plan, it's important to consider your specific goals and circumstances. Working with an experienced estate planning attorney can help you navigate the various options and create a plan that meets your unique needs. In addition to considering the various estate planning approaches available, it's also important to choose the right charitable organizations to support. Look for organizations that align with your values and have a track record of making a positive impact in the world.
By including charitable giving in your estate plan, you can leave a lasting legacy of generosity and make a positive impact on the world for future generations. Plus, you can also benefit from tax savings and other financial advantages.
It's important to note that estate planning and charitable giving are not one-time activities. As your circumstances and the world around you change, it's important to review and update your plan as needed. For example, if you experience a significant life change, such as the birth of a child or a change in your financial situation, it may be necessary to adjust your estate plan to ensure that your charitable giving goals are still being met.
Additionally, as new charitable organizations emerge and others change their focus, it's important to periodically review the organizations you support to ensure that they are still aligned with your values and making a positive impact.
In summary, including charitable giving in your estate plan can be a powerful way to leave a lasting impact on the world while also providing financial benefits for you and your loved ones. By working with an experienced estate planning attorney and carefully considering your options, you can create a plan that reflects your values and achieves your goals.