What is Charitable Planning?
America is a charitable-minded country as Americans donate not just their money, but their time to charitable causes. The National Center for Charitable Statistics reports more than 1.5 million non-profit organizations are registered in the United States. Cary Charitable Planning Lawyers and their goals are first and foremost about helping philanthropic causes that are meaningful to you.
When you engage in charitable planning, you can make predictable future gifts as a part of an overall estate plan. You may currently make charitable gifts yourself but are contemplating adding charitable planning into your estate plan to ensure your charitable giving continues after your death. When you take a proactive perspective to charitable planning, you ensure your charitable goals continue long after you are gone.
This ensures your history of giving becomes an integral part of your legacy. You also create a meaningful example for your loved ones to follow when you include charitable planning in your estate plan. Since charitable planning can be complex, having Cary Charitable Planning Attorneys from NC Planning by your side can ensure the process is successful—and easy. The NC Planning attorneys help you emphasize your legacy as well as the public good.
What Do A Cary Charitable Planning Lawyers Do?
While many individuals want to make charitable giving a part of their long-term estate plan, financial obligations can limit such gifts. Experienced Cary charitable planning attorneys can help you determine the best way to give, now and after you are gone. Making charitable gifts after your death can allow you to continue contributing to the causes that are important to you. The NC Planning attorneys can assist those who want to craft a legacy during their lifetime or after. We help individuals and families give back in meaningful ways.
At NC Planning, we can help you find ways to donate to the organizations that inspire you while developing a comprehensive estate plan that includes charitable foundations. Cary charitable planning attorneys will use such tools as lifetime gifts, beneficiary designations on death, Donor Advised Funds, Charitable Trusts, Charitable Foundations, and bequests in wills or trusts to help you meet your giving goals. We help you give back to the community through your estate, guiding you through the options and helping you incorporate charitable giving into your estate plan.
What Are the Benefits of Charitable Planning?
Charitable planning allows you to make charitable gifts while also providing inheritances for your heirs, decreasing your tax liability, and lowering taxes on your ordinary income. When you donate to a charity you care about, you want to know that donation is used to its highest purpose. A Charitable Remainder Trust as a part of your charitable planning can help ensure this occurs. A CRT is a type of irrevocable trust that can generate an income stream for beneficiaries, with the remainder of trust assets going to charities of your choice.
If you want to make a difference through charitable giving without losing the use of your assets in the interim, CRTs can be extremely beneficial. CRTs allow you to take federal income tax deductions when the trust is funded. The investment income earned by the CRT is also tax-exempt. Simply put, placing assets into a CRT rather than donating them directly allows you to get more for your money.
Planning for the Road Ahead
- Taxation Benefits—When you use proper tax planning strategies in your charitable giving, your contributions can potentially reduce income tax, capital gains taxes, and estate taxes. Donations to 501(c)(3) public charities provide an itemized deduction from your annual income. Charitable contributions can be used to reduce capital gains tax liabilities when you donate long-term appreciated assets. The fair market value of anything you give can be deducted from your income taxes, plus you receive a minimization of capital gains tax up to 20 percent. Capita gains tax affects such assets as real estate, stocks, and mutual funds. Since the federal estate and gift tax exemption is $12.06 million per individual, fewer estates will be subject to this tax. If you believe your estate will be subject to the federal estate and gift tax, you can remove assets from your estate through properly structured gifts and donations. Since charitable tax strategies can be complex, you should always consult Cary charitable planning attorneys at NC Planning.
- Charitable planning can prevent depletion, low return on charitable investments, or sustainability issues—when you engage in charitable planning you can ensure the charities you choose are sustainable and will continue. Your Cary charitable planning attorneys can also help you plan for a high return on your charitable investment. Finally, you want to ensure that the funds you leave to charities are not quickly depleted, allowing your gifts to continue far into the future.
- Charitable planning can prevent the selection of wrong charities—Make sure any charities you choose are fully vetted so you don’t end up choosing the “wrong” charities. You want to know for sure whether the charities you choose will use your donations wisely. You also want to ensure your donations align with your values, passions, and interests—and that the charitable foundation has a sustainable plan for the future. Determine whether you want to make a difference locally or globally when choosing a charitable foundation. The NC Planning team offers trusted guidance throughout your charitable planning.
Charitable Planning Goals
There are questions you must ask yourself when you are determining your goals for long-term charitable giving. Some of these questions include:
- One-time distribution vs. long-term distributions—Your NC Planning attorneys can explain the differences between a one-time distribution and long-term distributions in charitable giving in terms of tax savings. A one-time distribution occurs when the giver dies, and lump sums are given to specific charities. Long-term distributions are structured to last for years—or longer. Your specific situation will determine whether you should structure your distributions as one-time or long-term.
- Foundations vs. Funding –You have more control over where your charitable giving goes when you choose a private foundation over a fund. When you choose a fund, you are only making general recommendations to a firm that manages and distributes the money. However, you may potentially get more bang for your buck when you choose to fund.
- Sustainability and Charitable Return on Investment—You will want to choose charities that provide a good return on investment—that is, they use your funds wisely for the very purposes you chose them for. The charity must also be sustainable—not a “flash in the pan,” that will not continue doing good works.
Methods and Mechanisms for Charitable Planning
- Trusts—A charitable trust can allow you to set up your assets to benefit you, your beneficiaries, and a charity—at the same time. Charitable trusts also offer financial advantages when correctly structured. A charitable lead trust distributes a portion of its proceeds to charity, giving you a charitable donation tax deduction. The remainder of the principal is then distributed to your beneficiaries. A charitable remainder trust provides an income from the distribution of non-income-producing assets placed into the trust. You will receive a charitable donation tax deduction, then upon your death, your chosen charity receives the remainder of the assets.
- Foundations—In the context of charitable giving, a foundation is an entity that supports charitable activities by making grants to organizations for charitable purposes. A private foundation is usually supported financially by one individual, family, or corporation. Private foundations must pay out at least 5 percent of their assets each year in the form of operating charitable activities and grants.
- Donor-Advised Funds—Donor-advised funds can maximize giving impact as well as tax benefits as a method of supporting charitable causes. As of 2022, DAFs are the fastest-growing charitable giving vehicles across the United States. A donor-advised fund is essentially a charitable giving account for you and/or your family. You can contribute an array of assets beyond cash to the DAF. Your contribution is eligible for an immediate tax deduction at the time your gift is made, then those charitable assets grow, tax-free. Through your donor-advised funds, you can support public charities that align with your interests.
How Do Minimum Distributions from Retirement Accounts Affect Charitable Giving?
A required minimum distribution from your retirement account is the minimum amount of money that must be withdrawn from retirement accounts like IRAs, SEPs, SIMPLE IRAs, or employer-sponsored retirement plans once you reach a certain age. When you are planning your retirement account withdrawal strategy, you might want to consider making charitable donations through a Qualified Charitable Deduction. This is a direct transfer of funds from your retirement account to a qualified charity. Unlike regular withdrawals from an IRA, a Qualified Charitable Deduction excludes the amount donated from your taxable income.
How Cary Charitable Planning Attorneys Will Help You Plan for the Road Ahead
At NC Planning, we build strong client relationships, always ensuring we understand your goals prior to making recommendations. Charitable planning can be a complex area; while no one can predict what will happen tomorrow, with the right planning not only are you helping others but you are also prepared for most eventualities. In our advisory role, we offer strategic advice for you, your family, and your future. We believe in responsiveness, accountability, and open communication, believing that is the best path to taking care of our clients. We have offices in Cary, NC, as well as Raleigh, NC to best suit your needs. Contact the Cary charitable planning attorneys at NC Planning today to discuss your charitable planning needs, as well as a comprehensive estate plan.