The Advantages of Charitable Giving in Your Estate Plan
Planning for your estate is about more than setting up your kids in your will. There are several legal tools available to shield your assets from tax and creditor liability, avoid probate, look after your elder care needs, and provide for family members with special needs. One oft-overlooked aspect of estate planning is charitable donations. Including charitable contributions as part of your estate plan carries a number of benefits, in addition to the warm feeling you get from giving back to the community. Continue reading for a discussion of the advantages of including charitable giving in your estate plan. For trusted advice on planning your estate in Oregon and Washington, call a knowledgeable Portland and Vancouver estate planning attorney.
Donating to charity during your lifetime carries a tax benefit. You can write off charitable donations as a tax deduction, which can help you protect your assets overall. Pursuing charitable distributions through an estate plan allows you to acquire even more tax benefits than the immediate income tax deduction. If you set up a charitable trust, you can give more to the charities you love while obtaining benefits such as an exemption to the capital gains tax for asset sales.
Moreover, leaving assets to charity in your trust or will can reduce the taxable value of your estate overall. If you exceed the federal estate tax exemption–meaning your estate is worth more than $12 million–charitable giving can allow you to drop down below the threshold. State-level thresholds for the estate tax exemption are even lower–$1 million in Oregon and $2.193 million in Washington–creating an even greater advantage to charitable giving. You can reduce your estate taxes and keep more of your hard-earned money, all the while giving even more to the charitable organizations that you value.
Create an Income Stream
Using a charitable trust can allow you to donate valuable assets while also earning interest on those assets. When you donate an asset outright, you cannot earn interest on that asset. If you transfer the asset to a charitable trust, the trust can then sell those assets without incurring an additional capital gains tax liability. The trust can then place the remainder back into the trust, creating an income stream for the benefit of the donor. The donor can even choose to delay acceptance of the income until the (tax-free earnings) have reached a certain level or the donor’s tax bracket is lower, further limiting tax burdens and increasing the benefits.
Designate the Use of Your Donation
If you donate money or assets outright to a charity, you have less control over what happens to your donation. If you set up a charitable donation as part of a will or trust, you can condition that donation. You can choose either to have the donation further the organization’s “general purpose”–meaning they can use the funds as they see fit to further their mission–or to have the funds be designated for a specific purpose. So long as the charity can perform that specific function (e.g., feeding the homeless or providing legal services to indigent clients), they will use your donation for that purpose.
Call Vancouver Attorney John Lutgens for Help Planning Your Estate in Oregon or Washington State
For assistance with estate planning in Portland, Vancouver, or elsewhere throughout Oregon and Washington, contact trusted Vancouver estate planning and asset protection lawyer John Lutgens for a no-cost consultation at 360-693-2119.