While giving back during your lifetime is important, planned giving is a powerful way to extend your generosity beyond your lifetime, supporting causes you care about for years to come. Planned giving allows you to create a legacy that reflects your values, while also providing for your loved ones. This article will discuss the various forms of planned giving, and how you can use these tools to make a lasting difference in the world.
What is Planned Giving?
Planned giving encompasses various ways to incorporate charitable giving into your overall financial and estate plan. It’s about making a commitment to philanthropy that extends beyond your lifetime, and includes planning now to support the causes you care about after you have passed.
Types of Planned Giving
There are several planned giving options, each with unique benefits and implications. Understanding these options will empower you to choose the best strategy for your goals.
- Bequests in a Will: You can designate a specific amount of money or a portion of your estate to be gifted to your favorite charities through your will.
- Charitable Trusts: You can set up a trust that pays out income to either you or your family members for a specific period, with the remaining assets going to charity.
- Charitable Gift Annuities: You can transfer assets to a charity in exchange for fixed income payments for the rest of your life, or for a specific period. The charity then benefits after your death.
- Life Insurance: You can name a charity as the beneficiary of your life insurance, enabling a powerful gift to be made with very little investment.
Why Choose Planned Giving?
There are many reasons why someone may choose planned giving as a charitable strategy, some of them include:
- Create a Lasting Impact: Planned giving allows you to create a lasting impact on causes you care about long after your lifetime, providing much needed revenue for the future.
- Leave a Legacy: You can ensure your values are honored, and support the causes that you have been passionate about.
- Tax Benefits: Planned giving provides tax benefits by reducing your taxable estate.
- Flexibility: There are many different avenues for planned giving, so you can plan in a way that aligns with your goals.
Bequests in a Will
The most common type of planned giving is through a will. Here is what you need to know about including charities in your will:
- Specific Bequests: You can designate a specific dollar amount or percentage of your assets to be gifted to a charity.
- Residuary Bequests: You can gift the remainder of your estate, once all other bequests have been made, to a specific charity.
- Contingent Bequests: You can designate a charity to receive a gift only if the other named beneficiaries do not survive you.
Charitable Trusts
You can also establish a trust that will benefit both your beneficiaries and charities that you care about. Here are some things to understand about charitable trusts:
- Charitable Remainder Trust: This type of trust can provide you (or your chosen beneficiaries) with an income stream for a specified period, with the remaining assets going to the charity upon your passing.
- Charitable Lead Trust: With this trust type, a charity will receive income from your trust for a designated period, with the remaining assets going to your non-charitable beneficiaries.
The Power of Life Insurance
Life insurance can provide an affordable avenue for making large donations, as:
- Beneficiary Designations: You can name a charity as the beneficiary of your policy, or name a trust that will benefit charities that you have selected.
- Tax Advantages: This can be a tax-effective way to plan your estate and maximize the value of your gift.
Wills.com and Your Charitable Legacy
Wills.com is here to help you create a lasting legacy, and provide you with the tools to make it a reality. Our platform is designed to help you understand all of your planned giving options, and we allow you to easily integrate charitable bequests into your will. We also offer charities the ability to have Business Charity Accounts, which allow them to easily manage, and understand any planned giving that has been designated for them.
Frequently Asked Questions
- Q: What is the difference between a will and a trust?
- A: A will is a legal document that specifies how your assets will be distributed upon your passing, and a trust is a separate legal entity that holds and manages your assets while you are alive.
- Q: How does planned giving reduce my tax burden?
- A: Many planned giving strategies offer tax benefits, by reducing your taxable estate.
- Q: Can I change a planned giving arrangement after I make it?
- A: Many planned giving strategies can be altered or changed, however, you should always verify with a financial professional before making any changes.
- Q: What is a charitable remainder trust?
- A: A charitable remainder trust provides income to you (or other beneficiaries) for a specific period, with the remaining funds going to a charity of your choosing after you pass.
Conclusion
Planned giving is a way to make a lasting impact on the world, by making a pledge to continue to support the causes you love, even after your lifetime. By understanding the different methods of planned giving, and creating a detailed estate plan, you can create a legacy that will live on for generations to come. Now is the time to plan your future and create the legacy that you have always dreamed of.
Ready to plan your legacy? Create your free Wills.com account today!
Disclaimer: This article is for informational purposes only and does not constitute legal advice. For personalized guidance, consult an attorney or visit the Wills.com Learning center.