Charitable Giving and Estate Planning in Kentucky
Incorporating a charitable donation into your estate plan is known as “planned giving.” This considerate strategy not only enables you to create a lasting legacy that reflects your values and priorities but also inspires others to think about philanthropy within their financial planning. Planned giving also provides numerous advantages, such as lowering your estate and income tax obligations while enhancing your philanthropic influence on the causes you deeply care for. So, how can you successfully integrate planned giving into your estate plan? In the following guide, we will examine charitable giving and estate planning in Kentucky.
Gifts Upon Passing
The most prevalent method of planned giving involves arranging for charitable contributions to occur upon your passing. This can be effectively set up through several methods, including a Last Will and Testament, a revocable (“living”) trust, or by specifying beneficiary designations on retirement accounts, investment accounts, or life insurance policies. Each of these options offers different advantages and mechanisms for ensuring your philanthropic intentions are met.
Charitable Trusts
Another strategy for planned giving may include setting up a charitable trust or a charitable annuity. One significant advantage of these financial structures is the ability to receive an immediate tax deduction for donations made to charities that will take effect in the future.
A Charitable Remainder Trust
A “charitable remainder trust” allows you to retain the income generated from specific assets for a set period, which may be for your lifetime or a predetermined number of years. During this time, you can use this income for your needs or to provide for family members. Once the established period concludes, the remaining trust assets are transferred to your designated charitable organization. This setup provides you with current income support and ensures that your chosen charity benefits from your generosity in the long run.
A Charitable Lead Trust
A “charitable lead trust” functions by directing the income generated from specified assets to a charity for a defined duration. After this period has ended, the remaining assets are returned to you or your designated beneficiaries. This type of trust allows for significant charitable contributions while ensuring that your loved ones regain the assets after the charitable commitment is satisfied.
Charitable Annuity
A charitable annuity is a financial arrangement in which you enter into a contract with a nonprofit organization. In this agreement, you make a one-time lump sum donation to the charity, and in return, the charity commits to making regular payments to you, typically for the duration of your lifetime. This arrangement not only provides you with a reliable income stream but also allows you to support a cause you care about.
Furthermore, charitable annuities can offer potential tax benefits, including a charitable deduction for the portion of your gift that exceeds the present value of the annuity payments. As a result, a charitable annuity is an effective way to achieve philanthropic goals and financial stability.
Consider Seeking Legal Guidance
Given the complexity and potential tax implications of charitable trusts and annuities, individuals often seek advice from experienced estate planning attorneys who have dealt with charitable gifting before setting up these financial arrangements. This professional advice can help ensure that charitable giving aligns with an individual’s financial goals and complies with applicable laws.
Contact Hoffman Walker & Knauf To Learn More About Charitable Giving and Estate Planning
Sharing your wealth with others is one of life’s greatest rewards. If you are considering leaving assets to causes you care about, learn about the options you have. Contact,
Hoffman Walker & Knauf today and speak to an experienced Kentucky estate planning lawyer.
