Legacy planning is a more comprehensive approach to the estate planning process. When you consciously craft your legacy, you make sure that you pass along monetary resources to your loved ones in the optimal manner. At the same time, you can also address some other facets that can be quite meaningful to you and beneficial to others inside and outside of the family.
One way that you can leave a very positive lasting impression would be to provide resources for charitable causes and/or institutions that you support. Let’s look at some of the ways that this can be done effectively when you are putting your legacy plan in place.
Direct Gift Giving
You could choose to give direct gifts to nonprofit organizations while you are still alive. There are many possibilities, and one of them would be the funding of a community resource like a youth sports field or a new section for a library. In addition to the personal rewards, you also get charitable deductions, so you get a little something back for giving something back.
Donor Advised Funds
Another option would be a contribution into a donor advised fund. These funds are very popular for a few different reasons. Since all of the donors are collectively contributing toward the administration expenses, each donation is maximized for the benefit of the nonprofits.
After you make a single contribution into a donor advised fund, you can request that the resources be used to support multiple specific recipients. You get to support more than one worthy cause, but you can do so in a very efficient manner.
You get a charitable deduction for the year that you make the contribution, which is another major positive. This is true even if the fund has not yet distributed assets to any of the charities that will ultimately be receiving donations.
Plus, if you have estate tax concerns, you would be removing assets from your estate when you contribute them into the fund.
Private Family Foundations
We have all heard about the Bill and Melinda Gates Foundation, the Ford Foundation, and other family foundations that bear some very notable names. This can lead you to the belief that you have to be a billionaire to be able to establish a foundation, but this is really not the case.
Of course, if you have an enormous store of resources, this would be a logical course of action if you are interested in charitable giving. However, many people are surprised to hear that the majority of foundations in the United States, and there are more than 40,000 of them, are funded with less than $1 million.
You could establish a charitable trust such as a charitable remainder trust or a charitable lead trust to accomplish your philanthropic aims. These trusts can be especially useful for people that are faced with estate tax exposure.
To provide some clarity in this regard, the federal estate tax is applicable on asset transfers that exceed the amount of the exclusion or credit. At the time of this writing in 2019, the federal estate tax exclusion is $11.4 million, and the maximum rate is 40%.
You could potentially transfer assets at a significant tax discount if you fund one of these trusts with the benefit of legal counsel. When interest rates are low, as they have been for a number of years, the strategy is particularly viable.
Learn More About Legacy Planning
We have provided a little bit of food for thought about charitable giving here, and you can take the next step along the learning process if you read our special report on legacy planning. It is being offered free of charge, and you can click this link to access the report right now.
Let’s Have a Conversation!
Our doors are wide open if you would like to discuss your estate planning objectives with a licensed attorney. We can provide solutions for people at all ends of the monetary spectrum, and we provide personalized attention, because there is no one-size-fits-all estate plan.
You can set the wheels in motion right now if you send us a message requesting a consultation appointment, and you can expect a prompt response. If you would rather reach out over the phone, our number right here in Cincinnati is 513-721-1513.
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