Leaving money to charity can be rewarding in many ways. By supporting the charitable organization you believe in, you gain a sense of personal satisfaction while potentially saving money in gift and estate taxes.
Charitable giving can play an important role in your estate plan. Careful preparation is needed to minimize future transfer taxes. By leaving money to charity, the full amount of your charitable gift may be deducted from the value of your gift or taxable estate. Listed below are several ways to make a charitable gift.
Make an outright bequest in your will
The easiest and most direct way to make a charitable gift is by an outright bequest of cash in your will. Making an outright bequest requires only a short paragraph in your will that names the charitable beneficiary and states the amount of your gift. The outright bequest is especially appropriate when the amount of your gift is relatively modest, or when you want the funds to go to the charity without strings attached.
Make a charity the beneficiary of an IRA or retirement plan
If you have funds in an IRA or employer-sponsored retirement plan, you can name your favorite charity as a beneficiary. Naming a charity as beneficiary can provide double tax benefits. First, the charitable gift will be deductible for estate tax purposes. Second, the charity will not have to pay any income tax on the funds it receives.
Use a charitable trust
Another way to make a charitable gift is through a charitable trust. A charitable trust is a vehicle established during your lifetime with the dual purpose of donating to charity and providing for non-charitable beneficiaries (such as your children). There are four main types of charitable trusts: Charitable Lead Trust; Charitable Remainder Annuity Trust; Charitable Remainder Unitrust; and a Pooled Income Fund. The fiduciary professionals at LCNB can help you establish the type of trust arrangement that best meets your needs.
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