Many individuals financially support a variety of charities, and using their estate plan for this purpose is a powerful way to back the causes in which they believe. With the right planning in place, your estate can help the nonprofits and organizations that best align with your values.

Schneiders & Associates, LLP works with California individuals from all walks of life to help them create estate plans that advance their objectives while leaving behind significant legacies. Find out how we can design your plan to include charitable giving.

The Best Options for Structuring Your Plan

In addition to advancing the charities that are closest to your heart, a carefully written plan can reap tax benefits for your heirs by reducing the amount of your taxable estate. These are a few of the options for how to build your unique plan:

  • Include a charitable bequest in your will: This is simply a gift that is made through your last will and testament to a charity. The bequest can state specific assets you wish to convey (e.g. real property), a dollar amount, or a percentage of your estate.
  • Establish a charitable trust: Two of the most common types of charitable trusts in California are the charitable remainder trust (CRT) and charitable lead trust (CLT). With a CRT, assets are moved into a trust, providing income to you or your beneficiaries during your lifetime, and anything remaining after your death is given to charity. A CLT provides income to a charity for a certain number of years, after which remaining assets are distributed to beneficiaries.
  • Donor-advised fund (DAF): A DAF is an investment that allows someone to make an irrevocable charitable donation and thereby receive a tax benefit right away. As the donor, you can suggest grants to be made from the fund, over time, to your favorite causes.
  • Designate a charity as a retirement account beneficiary: Although most individuals usually name a person as the beneficiary of their retirement funds, you can designate a charity instead. Unlike individuals, nonprofits do not pay income taxes on distributions made from such accounts as 401(k)s and IRAs.

California-Specific Legal Considerations

There are a few legal matters unique to California that you should keep in mind as you design your estate plan for charitable giving:

  • Community property: As a community property state, if you give away any marital assets you may need the consent of your spouse. However, this does not apply to any property belonging solely to you.
  • Probate issues: California’s complex probate code is demanding, so it is critical that any charitable instructions be clearly stated to avoid delays, conflicts with heirs, and wasted assets. Our firm can help draft your comprehensive plan to avoid probate problems.
  • Tax deduction: Although California does not impose a state inheritance tax, there are federal rules concerning charitable deductions and estate taxes. We can help you maximize the benefits of all applicable estate tax laws, both for your chosen charities and your beneficiaries.

Work With a Dedicated Attorney to Support Your Favorite Causes

If you’ve never established an estate plan or it has been a while since you’ve updated it, the time to do so is now. We can review the above and other options that allow you to help the organizations and people you love the most. Connect today with Schneiders & Associates, LLP to get started.

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