Giving back to your community is one of the noblest things an individual can do. If you are someone who does not have the means to do so while you are alive, you may provide for your community in your estate plan. Please read on and reach out to our experienced, compassionate estate planning firm to learn more about charitable planning and how we can help. Here are some of the questions you may have regarding the legal process going forward:
What does charitable planning entail?
There are several different ways in which you may fulfill your charitable planning wishes. You should be pleased to know that you may do so through beneficiary designation on death, lifetime gifts, bequests in wills or trusts, or even lifetime gifts in trusts. Additionally, in some cases, you may use your life insurance policy, or even your retirement plan to fund charitable gifts. Your life insurance policy can very often be a useful tool to provide lifetime gifts or bequests on death to charities or non-profit organizations. Oftentimes, you will have the option of either gifting your insurance policy itself, or a portion of the proceeds upon your death through what is known as a “beneficiary designation.”
It is worth noting that qualified charities are not required to pay income tax on gifts provided via retirement accounts, so these funds are generally considered the most valuable to charities, as opposed to other assets your estate has to offer. You should also consider that individuals who are at least 70.5 years old considering lifetime gifts should review various tax provisions when determining the funds they use for the gifts in question. An estate planning attorney would be happy to help you weigh your options and make an informed decision.
What is the function of a charitable trust?
There are two main types of charitable trusts; charitable lead trusts and charitable remainder trusts. In charitable lead trusts, parts of the trust assets are distributed to charities over time, and after a designated period of time passes, the remaining assets in the trust are distributed to your beneficiaries either tax-free or with substantial tax savings. On the flip side, once a charitable remainder trust is established, a portion of income is distributed back to the creator of a trust, or the trust’s designated beneficiary. Once the individual passes away, his or her remaining assets will go to charity.
Contact our experienced New Jersey firm
Juan C. Velasco, Esq. is a trusted attorney who concentrates on bankruptcy, family law, real estate, and estate matters who has been serving the New Jersey area for over 25 years. If you need experienced legal counsel, please contact Velasco Law Office and we will be happy to assist you.