In 2010, Bill Gates and Warren Buffet, two of the world’s richest individuals, established what is known as “The Giving Pledge.” This pledge is a verbal, non-legal commitment to give half of their wealth to charity either during their lifetime or after their death.  Sixty-nine billionaires across the globe have also made the same pledge.  The impact that charitable giving of this magnitude could have on the world is hard to fathom.  Although many of us have no intention of leaving half of our wealth to charity, the benefits of utilizing charitable giving as part of your estate plan should not be ignored.

Most have never considered charitable giving as an estate planning tool.  Besides the benefits others will receive from your charitable gift, there are many tax and income benefits charitable giving can have on your estate. In fact, the tax savings achieved through charitable giving can net you more money in pocket than by simply selling your property and paying taxes to the government. Imagine that: leaving a legacy to a charity and coming out financially ahead. This is why carefully planned charitable giving is so powerful for many people.  The following are two examples of charitable giving strategies.

The first charitable gifting strategy is setting up a Charitable Remainder Trust. This type of trust is an irrevocable trust that you fund and obtain income from for a set period of time after which the remaining balance is gifted to a charity of your choice. This option gives you an income stream and multiple tax benefits for you and your beneficiaries. The second strategy is a Charitable Lead Trust. This type of trust is funded with assets that will go to your descendants upon your death. The difference between this and a normal trust is that a set percentage of the trust’s assets will go to charity. This allows you to pay a much smaller gift tax when initially funding the trust, while saving your beneficiaries from paying much larger estate taxes when they receive their shares.  These are just several examples of charitable giving strategies that may actually save your estate money while at the same time giving back to society.  Utilizing charitable giving as part of your estate plan is a way to leave a legacy you can truly be proud of.

For additional reading:

A Culture of Charitable Giving

Cheap Estate Planning Isn’t Cheap

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