Legal Advice: Estate Planning

Dear Yetta,

I heard you speaking recently at an event about estate planning. I wonder if you could give me some more information specifically about charitable giving to a non-profit or other organization doing important work.

-Charity
Dear Charity,

Thanks for your question. Charitable giving isn’t just a way to give back; it’s also an essential part of a well-planned estate that helps you create your legacy. There are numerous ways to incorporate charitable giving into your estate plan, but you can also start to engage in active giving now.

To be brief, besides an outright gift, I’ll talk about a couple of trusts: a Charitable Lead Trust and a Charitable Remainder Trust. Any kind of giving can have tax benefits, so you should work with a qualified tax adviser and/or an attorney to make sure you reap the rewards of your giving plan. As for trusts, a Charitable Lead Trust and Charitable Remainder Trust are two ways that you can engage in tax planning right away, or in your will.

In broad strokes, a Charitable Lead Trust is a trust which pays a percentage of interest earned from the trust principal to a non-profit of your choice. After a set number of years, or upon your demise, the principal in the trust can be paid out to your beneficiaries, including yourself. Charitable Lead Trusts can provide a steady stream of funding to a non-profit, reducing the tax burden on you or your estate (because the taxable estate does not include the funds in the trust), and can benefit the final beneficiaries of the trust.

A Charitable Remainder Trust is a bit like the flip side of the coin. The beneficiary of a Charitable Remainder Trust is one or more non-profits while the interest is paid to individual beneficiaries, including yourself, if you choose. This means that the interest is paid to an individual—and, after a set number of years, or upon your demise, the remaining principal is paid to the designated non-profit. Because Charitable Remainder Trusts can be set up during your lifetime, you can make yourself the beneficiary, and enjoy income from the trust, knowing that whatever’s left at the end will go to the non-profit. A Charitable Remainder Trust can also be tax-deductible.

—

Email questions to info@kurlandassociates.com or call 212-253-6911.

*This column is not a consultation with an attorney and should in no way be construed as such or as a substitute for such consultation. Anyone with legal issues or concerns should seek the advice of her own attorney.