Charitable Planning

Charitable Planning Attorneys Ensure Gifts Maximized | Taxes Minimized

charitable planning | altman & associates

Many individuals are blessed with the ability, foresight, and compassion to make a charitable cause a part of their estate plan. Though many people provide gifts to their favorite cause, organization, or institution during their lifetime, these gifts are often limited due to an individual’s financial obligations during their lifetime.

Making a gift after your death provides an opportunity to make a substantial contribution to something important to you. We’ve had the privilege of helping many clients establish estate plans with a focus on philanthropy.

Including a Charitable Gift in a Will or Trust

If you have started the estate planning process, then you probably have a will or trust already drafted. If not, there are innumerable reasons to draft these essential estate planning documents. It is easy to make charitable gifts through wills and trusts.

If you include language in your will or trust which directs your Personal Representative or Trustee to make a charitable gift, then they must do so – assuming the necessary assets are available. Though the process is straightforward, you should consider your overall estate plan in the context of any charitable gift.

First, remember that surviving spouses are entitled to, at the very least, a surviving spouse share. Second, consider how the gift is deducted from your estate in relation to other gifts or bequests. If you want to provide a particular asset or a set amount of money to a charitable organization, should your estate make that gift first? Should the gift be made after other gifts or bequests are made, or should the residual or remainder of your estate go to the charitable organization?

Remember, a probate court will take out certain fees and ensure a surviving spouse is taken care of. After that, an estate generally pays gifts in the order in which they are listed. If your charitable gift is the last gift to be paid and no assets are left in the estate, then your estate cannot make the charitable gift.

Charitable Remainder Trust

Protect Your Gift with a Charitable Remainder Trust or Charitable Lead Trust. Leaving a legacy is important, but so is the peace of mind that your legacy represents your wishes long after you are gone. Many individuals want to make charitable gifts as part of their estate plan, but want to make sure that the gift is lasting or supports specific charitable activities.

A Charitable Remainder Trust (CRT) allows you to place valuable assets, many time an income-producing asset into trust for a period of time or for your life or the life of someone you choose. It allows you or someone you choose to receive an income stream for life or a period of time.

The CRT assets can then pass to the benefitted charity at the end of a specific period. Similarly, a Charitable Lead Trust (CLT) can make distributions to a charity, and then ultimately pass the assets to your heirs. But in either case, when you create your CRT or CLT, you can establish terms and conditions, such as:

  • The term, frequency, and amount of distributions.
  • How the distributed assets are to be used.
  • When and how the assets will transfer from the trust to another entity.
  • The scenarios under which the assets might revert to the trust or the Testator’s heirs.

Our team is highly-experienced in creating efficient, impactful charitable trusts which reflect your wishes.

Establishing a Charitable Foundation

You don’t need to be a famous billionaire to establish your own charitable foundation. Instead, you need vision, assets, and proper planning to form a foundation that will make a difference.  As is the case with any organization, it is important to engage in the necessary due diligence to ensure that the mission of the organization is properly pursued. For a charitable foundation this means:

  • Drafting the necessary documents.
  • Properly operating the organization.
  • Achieving and maintaining non-profit status.
  • Managing the finances of the foundation.

All of these activities must be done in accordance with both state and federal law. Indeed, even starting a charitable foundation in Maryland, for example, requires going through processes with the State of Maryland and the Internal Revenue Service. Our attorneys are familiar with these processes, and can counsel you on the legal compliance aspects of your charitable foundation.

Charitable Giving Taxation Planning and Strategies

Changes to the tax law in 2018 have taken away most people’s ability to deduct charitable contributions, but there are still options to consider in order to give and still receive. The Tax Cuts and Jobs Act (TCJA) went into effect on Jan. 1,  and fortunately, there are options for donors who would like to obtain a tax benefit for their generosity. For most donors, qualified charitable distributions (QCDs) make it possible to net a greater tax benefit.

Charitable stacking or lumping

Charitable stacking or lumping is another option quickly emerging in financial planning circles as the charitable strategy of the future. For example, instead of giving $10,000 per year over five years to a charity, you would give $50,000 in one year, taking you above the new $24,000 standard deduction and thus providing a tax benefit for your contribution.

Donor-advised funds

Many of these Donor-advised funds, or “lumped” contributions will find their way to donor-advised funds, which offer an immediate tax benefit for your irrevocable contribution. The silver lining for large donors is that the charitable contribution cap has been expanded as a percentage of AGI.

The Billion-Dollar Challenge for Charities

The Tax Policy Center estimates that the House of Representatives’ version of the TCJA would reduce charitable giving by $12 billion to $20 billion in 2018. This estimate does not consider the likely decrease in charitable giving that will result from the doubling of the estate exemption to roughly $11 million per person. We are receiving many calls from non-profit organizations seeking guidance for educating donors. If you work in the fundraising world, it benefits you to make such education a top priority.

Sound Guidance for Charitable Planning

Having the compassion and thoughtfulness to consider charitable contributions as part of your estate plan is commendable. The Altman & Associates team shares your sense of compassion and work closely with you to address your individualized charitable giving goals, ensuring your gift is maximized and taxes are minimized.  Contact us by phone at (301) 468-3220 or online to schedule a consultation.

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