An estate plan is the perfect way to communicate your wishes as to how you want your assets distributed after you pass away. In addition to distributing your wealth to your beneficiaries, you can also use your estate plan to help charities you care about. There are multiple strategies for making charitable giving part of your estate plan. The following are just a few of them.
Appreciated stock
If you own stock that has appreciated in value, you can gift that stock to a charity during your lifetime. You will receive a tax deduction equal to the full market value of the stock at the time you make the gift.
Retirement account beneficiary
You can name a charity as a beneficiary of all or a percentage of your retirement accounts. These accounts can include an IRA, 401k, 403b, etc.
Charitable remainder trust
Trusts can be customized for many purposes. You can create a charitable remainder trust where an individual receives annual payments from the trust for a period of time and then the remainder of the trust is distributed to charities of your choosing.
Qualified Charitable Distribution
You can donate up to $100,000 each year per charity from your IRA. This will count towards any required minimum distribution an account holder will need to make each year. With a QCD you can benefit the charity, fulfill the RMD obligation and reduce your taxable income.
Will or trust
A simple way to benefit a charity is to name them as a beneficiary in your will or trust stating the amount you would like to leave the charity.
A legal professional who is skilled in estate planning can help their client understand their options when it comes to using an estate plan for charitable giving. There are many ways to do this and some even have tax advantages.