Do you have a charity or nonprofit that is close to your heart? Do you wish you could give more but due to the rising costs of living, are unable to? One way to give to your favorite charities and nonprofits is through a legacy gift.
Legacy gifts (or planned gifts) are donations that are planned to be distributed from an individual's estate after their death. This is usually done through that individual's Last Will and Testament or through their Trust, but it is possible to achieve the same outcome in a number of different ways. Leaving legacy gifts can reduce the amount of estate taxes due upon your death. When deciding to leave a legacy gift, you generally need the name and Federal Tax ID number of the organization. You may decide to distribute either a percentage or a specific dollar amount of your estate to your chosen charities or nonprofits.
Leaving a legacy gift through a Will is relatively simple. You can name the charity or nonprofit as one of your beneficiaries, along with the amount you would like to give to that organization. This amount can be expressed as function of the size of your estate, as a specific amount, or as a designated asset or assets. When you pass away, assets outlined for charitable purposes in your Will may have to pass through probate, which takes time. Careful planning may reduce or eliminate the time and administrative burden associated with probate.
Another option for legacy gifting is distribution from a Trust. Establishing a Trust can help to avoid probate. This helps beneficiaries to gain access to your estate more quickly and may also have some tax advantages. When you make a charitable gift through a Trust, you may be able to give more specific instructions regarding how you wish the money to be spent by the organization and your gifts may be distributed or redirected based on your instructions within the instrument.
While there are a number of other legacy gifting methods, including charitable trusts, donor advised funds, and others the core principle to keep in mind is that just because we are in an inflationary environment doesn't mean you lose your ability to support your favorite charity.
If you have any questions about legacy gifts or have other estate planning needs, please reach out to us at Greenwood Law.