Consider Charitable Giving When Creating Your Financial Plan

Whether you want to give hundreds of dollars or hundreds of thousands, a planned approach to charitable giving will help your donations go farther and have a bigger impact. By integrating your charitable giving goals into your financial plan, you can use your assets to their fullest potential and make financial contributions as effective as possible. A planned approach allows you to incorporate charitable giving into your everyday money habits and ongoing financial goals.

In addition to the altruistic and goodwill benefits any charitable contribution brings, it can also have significant tax advantages. When deciding your estate-planning strategies, consider a charitable contribution to help the charity of your choice as well as provide you with a steady stream of income and potential tax benefits. There are different options for setting up a charitable contribution through your estate plan. The easiest is a simple bequest through your will. Remember that charitable contributions are 100% deductible from estate taxes, if estate taxes apply.

What may be even more beneficial for you than a simple bequest is a charitable remainder trust (CRT). A CRT is an irrevocable, tax-exempt trust in which you place assets to provide income for you or your beneficiaries during a specific period of time (i.e., your/their lifetime or a term not to exceed 20 years). At the end of that period, the remaining assets will be turned over to the charity of your choice. The trust can be funded with a wide assortment of assets, including bonds, mutual funds, stocks, and real estate and may be set up during life or through your will (testamentary trust).

Your financial advisor can give you more information about these options and others. There are also many resources online if you’d like to research the topic more yourself. Don't forget to ask yourself these questions first. Whatever option you choose, including charitable giving in your financial plan will allow you to leave a legacy that reflects your interests and values.