Charitable Estate Planning: Create a Lasting Legacy
By Chad Chase, JD, CTFA
Have you ever considered the power of your legacy? Your financial resources can be used to make a lasting impact on the causes you care about.
In this video, we explore various estate-planning techniques that can help you support your favorite charities while building a legacy of generosity.
Transcript
Hi, I'm Chad Chase. I'm a Managing Principal and Senior Financial Advisor at CGN Advisors, and today I want to talk about estate planning techniques that allow you to leave a legacy of generosity while simultaneously supporting charitable causes.
Direct Gifts: A Simple Way to Make an Immediate Impact
The first technique I want to discuss is using a direct gift. Outright gifts like cash, appreciated securities, and other assets are straightforward and effective ways to show your support. With direct gifts, you can make an immediate impact on the recipient’s mission through your generosity. These types of gifts can also significantly lower your tax bill, making them a win-win for you and the charitable causes you care about.
Qualified Charitable Distributions (QCDs): Tax-Efficient Giving from Your IRA
Next are qualified charitable distributions, or QCDs. This is a distribution from an IRA directly to a qualified charity that meets certain IRS requirements. It allows taxpayers aged 70 and a half or older to give directly to charities without having to claim that distribution as income. QCDs also count toward satisfying a required minimum distribution (RMD) from your IRA, making it a great option for tax-efficient charitable giving.
Charitable Gift Annuities: Support Charities While Receiving Fixed Payments
Another charitable giving technique is a charitable gift annuity. With a charitable gift annuity, you make a sizable contribution to a charity in exchange for fixed lifetime payments back to you. This strategy provides a way to support the charities you care about while earning a steady income for life. Charitable annuities often offer payments at a higher interest rate than traditional annuities, helping you leave a lasting legacy while also reducing your taxable estate.
Charitable Remainder Trusts (CRTs): Long-Term Income and Lasting Impact
A charitable remainder trust, or CRT, is another option to consider. With a CRT, you place assets into an irrevocable trust that pays you or other designated individuals an income for a set period or for life. Once the income term ends, the remaining assets are distributed to the charity of your choice. Because the ultimate beneficiary of the CRT is a charitable organization, establishing a CRT can provide an immediate charitable deduction, potentially reducing your current income tax. CRTs are especially useful for transferring highly appreciated assets, helping to optimize the tax benefits of your charitable giving strategy.
Donor-Advised Funds (DAFs): Flexible, Long-Term Giving
The final charitable giving technique I want to mention is donor-advised funds, or DAFs. This estate planning tool has become quite popular for supporting charitable causes in a highly flexible and impactful way. Not only do DAFs allow you to establish yourself as a consistently generous donor, but they also provide an immediate tax deduction. By setting up a DAF, you can recommend grants to your chosen charities at your own pace, allowing you flexibility in your giving strategy. Plus, the assets in the fund can be invested to grow over time, allowing your contributions to make an even greater impact. If you wish, you can also involve your family in recommending grants, creating an opportunity to pass on the values of charitable giving and build a lasting legacy.
Choosing the Right Charitable Giving Strategy for Your Estate Plan
The trick to effective charitable giving in estate planning is using the right technique for your unique goals and circumstances. At CGN Advisors, we can help you find the technique that is best suited for your specific situation. To schedule a meeting, call our Manhattan, Kansas office at 785-340-3434 or our Rogers, Arkansas office at 479-335-1034.
By exploring these estate planning techniques, you can build a legacy that supports the causes you care about while benefiting from tax advantages and creating long-lasting impact.