If you are concerned that much of your estate will be forfeited to the government in the form of rising estate taxes, making gifts to qualified charitable organizations may allow you to achieve your legacy planning goals while reducing the amount of your assets that will be lost to taxes. In this article, Pennyborn.com provides an overview of options for charitable giving as part of your estate plan and the potential estate tax benefits of making charitable gifts. Estate planning trusts can play an effective role in reducing estate taxes. Charitable remainder trusts are often used to support favorite charities while minimizing estate taxes. Estate tax rates could increase in subsequent tax years. Consult an estate planning attorney or a tax professional to learn about options for reducing estate taxes through charitable giving.
Charitable Giving Rules in the U.S.
When planning your charitable gifts for the 2020 and 2021 tax years, make sure you have current information on U.S. tax guidelines regarding deductions. Items that may be deducted and the rules applicable to such deductions change frequently. Recent tax legislation has resulted in many changes from prior years. You may want to refer to a tax law guide on charitable giving if you will be donating substantial amounts or leaving a large bequest or gift in your will or trust. The Tax Law of Charitable Giving by Bruce R. Hopkins is a comprehensive guide to the rules applicable to charitable giving in the U.S. It provides meticulously researched answers to the most common questions about charitable giving in the context of estate planning. The author is a highly regarded authority on non-profit and tax-exempt organizations.The Tax Law of Charitable Giving by Bruce R. Hopkins features detailed information on charitable contributions, charitable deductions, estate taxes, gift taxes, charitable contributions of life insurance and IRA's, charitable remainder trusts, charitable lead trusts, charitable gift annuities, and other types of planned giving techniques, such as donor advised funds and private foundations.This charitable giving guide also includes information on the generation skipping transfer tax, capital gains issues, and issues regarding charitable giving of a variety of different corporate and business interests. Citations to federal statutes, regulations, rulings, and cases are included, along with discussions of pertinent tax forms. When you use this guide, you will also want to reference the 2019 supplement. The Tax Law of Charitable Giving: 2019 Cumulative Supplement, 5th Edition, by Bruce R. Hopkins, was published on April 9, 2019. To view a list of related tax law guides, see our
Estate Tax Books page.
Charitable Gift Accounts and Estate Planning
You may want to consider using a charitable giving account to make your charitable donations, whether you do so on an annual basis or as part of the estate planning process. You can make contributions through a charitable gift account that may be eligible for immediate tax deductions.You can either let the account grow as an investment, for use in making donations to your favorite charities at a later date, or begin making gifts to charity after you have funds in the charitable gift account. A charitable gift account can be set up to meet your unique giving style, whether through monthly donations, annual donations, or random, unscheduled donations.One of the greatest advantages to this type of charitable giving is if you own stock that has appreciated in value, you may be able to donate that stock to your favorite charity without incurring capital gains taxes. See Stock Powers.Many of the nation's leading brokerage firms operate charitable gift funds. If you already have a brokerage account, IRA or 401k plan with one of these firms, it is easy to open a charitable gift fund account.There are many charitable funds from which to choose. Check with your financial advisor for more information on which charitable giving account is the best match for your estate planning goals.You can open a charitable giving account online and find all the information on how to make an immediate contribution. After your charitable giving account is open, there are a variety of easy ways to make contributions. You can contribute cash via check, wire or electronic transfer. You can transfer publicly traded stocks, mutual fund shares, publicly traded bonds, and certain other types of assets by completing a few simple forms.After your account is funded, you recommend how the assets should be invested or you can have your financial advisor make recommendations regarding how to invest the funds. When you are ready, you make recommendations for grants to your favorite public charities.Using a charitable giving account is an organized way to keep track of your charitable giving. You can track all your contributions online from one account and receive a single tax form to use with your tax filings. If you have difficulty gathering all your donation receipts at tax time, you may like the convenience of consolidating your charitable giving into one of these types of accounts.By using a charitable gift fund, you will have a variety of investment options so your donated assets can continue to grow tax deferred until they are donated.You can also name a charitable gift fund in your estate plan. This can be done when you name beneficiaries in your will or other estate planning documents. To learn more about how to use your estate plan to make a positive impact, see Legacy Planning.
Using Land for Charitable Giving
If you are the owner of a farm, ranch, forest land, historic property or another type of real property you would like preserved for future generations, you may want to consider using a conservation easement as part of your charitable giving. Donating a conservation easement to a land trust or similar type of conservation organization may qualify you for substantial tax savings. It may also be a way to plan your legacy. To learn how to use a conservation easement as part of your estate plan, go to conservation easements.
INFORMATION ON THIS SITE, INCLUDING ARTICLES, ESTATE PLANNING FORMS, AND THE ESTATE PLANNING BLOG, DOES NOT CONSTITUTE LEGAL, FINANCIAL OR TAX ADVICE. Pennyborn.com is not a law firm and is not a substitute for a lawyer. Your use of this site does not create an attorney-client relationship. Information on this site is for educational purposes only and may not be accurate, complete or up to date.
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