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Charitable giving and estate planning options

On Behalf of | Mar 13, 2015 | Estate Planning |

Many New Jersey residents have a long history of giving their time and money to various charities. It comes as no surprise that those same individuals would like to include their favorite charitable organizations within their estate planning. There are also a number of tax benefits that can accompany charitable giving, many of which yield benefits during the life of the giver. Understanding the various options is important when determining how to work charity into one’s greater estate plan.

One way to pass assets on to a favorite charity is by naming the organization as the “transfer on death” or TOD beneficiary. This can be done with a piece of personal property such as a car, boat or recreational vehicle. It is also an effective strategy for various savings or investment accounts. At the time of the holder’s death, the assets will pass immediately to the named beneficiary, in this case the charitable organization.

Another option is the creation of a charitable remainder trust. These trusts are created when an individual funds the trust during his or her lifetime. The gift is irrevocable, meaning that the trust can never be broken down. The donor can structure the trust so that income is received for the duration of their lifetime. All assets remaining within the trust at the time of the donor’s death will pass to the designated charity.

Yet another option is the creation of a family charitable foundation. This structure allows the donor to be involved in the administration of the charitable efforts during his or her lifetime, and also provides for that gift to continue after death. In addition, it is possible to include beneficiaries who will also receive benefits from the trust before the remaining funds are given to charity at a later point in time.

As illustrated in these limited examples, there are a number of ways that New Jersey residents can include charitable giving within their overall estate planning package. In some cases, these efforts will have tax benefits that come into play well before the death of the donor. Other approaches simply allow an individual or family to select the organizations they wish to receive assets upon their death. There are a wide range of ways to accomplish the goal of passing wealth on for charitable uses, which can make such donations easier to plan for and accomplish.

Source: semissourian.com, “Feeling generous? A guide to working your favorite charities into your estate plan“, Robyn Gautschy, March 2, 2015