Charitable planning allows you to meet your charitable giving goals while ensuring the most efficient outcomes for you and your beneficiaries while doing so. When you implement a sound charitable planning strategy, you will have more flexibility in your philanthropic efforts and be able to provide essential financial support to the causes you hold dear. It may seem that supporting a charitable organization is fairly simple—you donate and receive a tax deduction.
But are you aware that you can maximize the value of your contributions when you engage in charitable planning? Most people are unaware of the many benefits of having a solid charitable giving plan. A charitable giving plan will ensure your contributions grow, and you will receive every personal tax benefit. The San Jose charitable planning attorneys at the Steburg Law Firm can help emphasize your legacy and the public good through good planning strategies.
What Do San Jose Charitable Planning Attorneys Do, and What Are the Benefits of Charitable Planning?
You may have a different understanding of your “legacy” and how that legacy should be represented in your estate plan. For example, if you are charitably minded, legacy planning may include your support of organizations that serve causes you to believe in. When addressed in your estate plan, charitable giving can take on many different forms, although they usually fall within two categories.
- If your goal is to provide one-time charitable benefits upon your death, that distribution will follow your probate or the administration of your trust. This means that funds from your estate would be directly distributed to the charity or charities of your choice.
- The goal of supporting a charitable organization over an extended period rather than a one-time distribution requires more careful planning to ensure fund sustainability.
Some individuals want to direct whom the charitable giving goes to, how often it occurs, and even how the donations are used. Others may leave these options up to their loved ones to encourage philanthropy. Regardless of your personal choices, it is essential that you have a highly experienced San Jose charitable planning attorney from Steburg Law Firm helping you make the necessary decisions to ensure your legacy endures after you are gone.
If you direct that money distributed to a specified charity only to be used for certain aspects of the entity, charitable giving can become more complex. These complexities can be properly addressed through a Charitable Remainder Trust, a Charitable Lead Trust, or a Revocable Living Trust with a Charitable and Non-charitable Share Allocation.
Your San Jose charitable planning attorney from Steburg Law Firm will discuss the wide range of options regarding charitable planning, some of which can provide you or your heirs with specific tax savings. We understand that these options are both personal and specific to your situation. Once we have helped you choose a charitable giving plan, we will help you know how the plan is maintained, how financially viable the plan is, and whether the plan is realistic in supporting your desired charities and your loved ones.
Are There Risks Associated with Charitable Planning?
While charitable giving usually has more positives than negatives, there can be risks.
- Taxation can be problematic if you do not consult knowledgeable San Jose charitable planning attorneys when setting up your charitable giving. For example, your heirs could be taxed on the gifts to charity when the trust or other document is not structured correctly.
- Depletion is often a problem when you set up a charitable giving plan that fails to consider specific issues—like inflation or other issues that could affect your allocated amount. Then, once the funds are depleted, your heirs must make tough decisions regarding whether to continue the charitable giving out of their inheritance or let it lapse.
- Low return on investment—Sometimes, very good charities spend more on CEO salaries than on charity. If your money is not being used as you expected it to, either you (during your life) or your heirs (after your death) will be forced to take a hard look at the chosen charity and determine whether giving should continue.
- Sustainability—It could turn out that your chosen charity is not sustainable. Perhaps the charity failed to receive sufficient funds to continue their charitable work, or the charity is being mismanaged. Either way, if the charity folds, you or your heirs must decide whether the charity should be replaced with another or abandoned altogether.
- Selecting the wrong charities or beneficiaries—Perhaps when you chose specific charities, you were confident that they supported issues you strongly believed in. Should that change over time, you will have to decide whether charitable giving to that entity should be continued or halted.
What Are Your Goals Regarding Charitable Planning?
Most of us who engage in charitable giving have an idea of our goals surrounding that giving. If you don’t, take the time to sit down and think about your goals regarding charitable giving and planning. Then you can discuss those goals with your San Jose charitable planning attorneys, who can structure a giving plan that fully meets your goals. Some of the decisions you will make include:
One-time Distributions vs. Long-term Distributions
Following your death, would you like to bestow a one-time charitable distribution to one or more charities, or would you prefer that the charitable giving be distributed each year for a specific time
Establishing Foundations vs. Funding Existing Charitable Entities
Like some individuals, rather than financing an existing charity, you may choose to develop your foundation, perhaps in the name of a loved one. This allows you more control over how the funds are used, ensuring your money is being spent according to your wishes. When you establish a foundation, you may expect it to continue perpetually.
Sustainability should always be a primary goal. You need to ensure that your plan for charitable giving is sustainable over the long term—that is, will the funds be there to support the charity long after you are gone?
How is Charitable Planning Accomplished?
Trusts are a popular way to fund charitable giving and are often used in charitable planning. The first type of trust used for charitable donations is a Revocable Living Trust with a Charitable and Non-charitable Share Allocation. There are few specific tax savings to you as the grantor of this trust. However, it is the most common. This option is generally used by those who give to charities, not for tax benefits, but simply because they believe in the work the charity is accomplishing. This type of trust allows your family to avoid the probate process while still having a roadmap they can follow. This charitable giving trust can be altered or eliminated whenever you choose.
- Charitable Remainder Trust—This type of trust does provide significant tax benefits to you, as the Grantor, during your lifetime. You will establish the trust, committing certain assets that will remain in the faith after your death or a specific number of years. Until your end, you will receive annual distributions from trust assets and can take a yearly tax deduction despite receiving those deductions.
- Charitable Lead Trust—This type of trust allows you to commit to the benefit of one or more charities qualified as charities under the IRS code. When correctly planned, you reap considerable tax savings during your life after committing to a certain amount of annual distributions from the trust. Regardless of whether the income from the faith has kept up with the trust obligations, these annual distributions must be made. Upon your death, any remaining trust assets will be given to your choice of beneficiary or beneficiaries.
- Foundations—The IRS classifies charities as either private foundations or public charities. A private foundation is established by an individual, corporation, or family to support specific charitable activities. The foundation is overseen by trustees or a board of directors.
- Donor-Advised Funds—These are dedicated accounts for charitable giving that can be established under a name chosen by the donor—somewhat similar to a foundation. When you make irrevocable gifts to a donor-advised fund, you garner valuable tax deductions, anonymity, and flexibility in giving. In addition, the sponsoring organization handles administrative reporting, making a donor-advised fund easier to establish and maintain than a foundation.
What are Mandatory Distributions From Retirement Accounts?
If you have been saving for retirement through pre-tax accounts for a good portion of your life, you may be required to begin withdrawing money at a specific age. If you do not need those distributions financially, you can use charitable contributions to reduce your tax burden significantly. You can still withdraw the mandated amount from your retirement account, but you can maximize tax savings by giving that money to a charitable organization.
How Do You Select the Best Charitable Planning Attorneys for Your Current Situation and Future Needs?
Selecting the best charitable planning attorneys for your goals can seem overwhelming. Your attorney should be deeply experienced and well-equipped to help you through the maze of charitable planning. Your lawyer should provide a holistic view of planning to ensure effectiveness with the goal of building strong client relationships prior to making recommendations. You should feel confident that decisions are ultimately good for you, your family members, and the charities you choose.
However, we also strongly believe that once you speak to attorneys Anita Steburg and Anam Hasan, you will see why you should choose Steburg Law Firm. We are knowledgeable, highly-skilled charitable planning attorneys ready to help you ensure your legacy continues, even after you are gone.
How the San Jose Charitable Planning Attorneys at Steburg Law Firm Will Protect Your Family and Preserve Your Legacy
The San Jose charitable planning attorneys at Steburg Law Firm are committed to protecting your family while preserving your legacy. Our experienced attorneys will work hard to ensure your wishes are thoroughly outlined and legally protected under California law. In addition, we will ensure you have the tools you need to create a charitable giving plan that will provide you with peace of mind. Contact Steburg Law Firm to discuss your options.