When you are contemplating your legacy, you may feel as though you would like to set aside resources for charitable causes or nonprofit institutions. It is an opportunity to give something back, and you will be remembered for your generosity when you take this step.
There are different ways to satisfy your philanthropic urges, and we can explain your options and provide recommendations so you can make informed decisions.
Giving is its own reward, and there are some tax benefits that go along with charitable acts. The federal estate tax is a factor for high net worth individuals, and a charitable remainder trust can provide estate tax efficiency.
You also reduce your income tax liability when you provide resources for tax-exempt charitable organizations, so it is beneficial on multiple different levels.
We have all heard of family foundations that carry the names of some of the most high-profile wealthy individuals in the country. This can lead you to the belief that you must be a billionaire to establish a private foundation, but this is not necessarily the case.
If you create a foundation, your name will be associated with ongoing efforts to make the world a better place. There are tax advantages, you maintain complete control while you are living, and the foundation can potentially employ family members going forward.
Donor Advised Funds
A donor advised fund is an alternative to a private foundation, and these funds are very widely utilized. You make a single contribution into the fund, and you can make recommendations with regard to the charitable causes that will be supported.
This allows for very efficient giving because you do not have to make separate contributions to multiple different entities. You get a tax deduction for the current year when you contribute into a donor advised fund, even if no donations are made during the year.
Since many donors contribute into a donor advised fund, the administration costs are shared by many different people. This is a very cost-effective way to support your favorite charities.
Charitable giving can be spontaneous, and there is also the planned giving approach. This can be part of your broader financial plan that culminates in the passing of your legacy. An effective planned giving strategy can maximize your philanthropic impact and mitigate your tax burden.
We Are Here to Help!
If you are ready to work with a Naperville, IL estate planning lawyer to implement a charitable giving plan, we can help. You can send us a message to request a consultation appointment, and we can be reached by phone at 630-568-8611.