What You Should Know About Donating Your Estate To Charity

We all want to leave behind a legacy when we are no more. Wanting to support a cause that you truly believe in is a noble idea. And so is donating your assets to charity when you are gone. Charity donations need not always be just a check that you write to a non-profit once in a while. It can also continue after you in the form of your bequest.

But even before you plan to donate your estate to a charitable cause, it is important to understand what it means and what it involves. There are different ways you can donate to charity and you must know which would be the best approach.

Choosing the cause and determining the gift you want to make

The first and most important step in this process is to decide which charitable organization or cause you wish to support. There are hundreds of nonprofits out there, each serving a different cause. Not all of them may be doing their part as honestly as you would expect. Or they may be working for a cause that you don’t truly stand by.

You must know where your assets are going and ensure that it is a cause you always wanted to help. Donating to charity is not only about leaving a legacy but also about your peace of mind in doing so.

The other thing that you need to decide is in what form you would like to donate. Will it be a specific dollar amount that you are donating or a tangible asset like a house or an office, etc.? Or are you going to leave a percentage of your entire estate to the charitable cause?

Adding the charity as a beneficiary of your retirement account

The next decision you would want to make is when to donate. You can either donate during your lifetime or you could add the charitable organization as a beneficiary of your retirement account. If you are making donations during your lifetime, annually, you may be eligible for some tax credits on the donation every year.

If you add the charity as a beneficiary of your estate or account, the amount in the account is considered to be held by the beneficiary. And since charities are exempt from paying taxes on donations, the entire amount can be tax-free. Both these options have their own advantages.

Making the charitable organization a beneficiary of your retirement account saves your family from the tax burden of your assets too. If a charity withdraws the amount from your retirement account, they do not pay any taxes on it. But if your family receives distributions from the retirement account, they will be taxed at the usual rates for an individual.

So the best estate plan is to fund the charity with your retirement account and leave your other assets to your family. You should consult an experienced probate litigation lawyer in Miami to understand what would be a more viable option for you.

Including the donation in your revocable trust or will

The part of your estate that you want to leave to the charity can either be included in your will or a revocable trust as well. There are different arrangements for a charitable trust that you create. For instance, a charitable lead trust lets you make donations to charities during your lifetime. On your death or after a fixed term that you choose, the remainder of the assets in the trust go to other beneficiaries you have added.

With a charitable remainder trust, on the other hand, you or other beneficiaries you have added can receive payments from the trust during your lifetime. After your passing, the remainder of the assets in the trust goes to the charity you have picked.

In any case, you must make sure that your list of beneficiaries is updated along with transfer on death (TOD) designations, especially when there is more than one beneficiary. This is very important to avoid any conflict between the charitable organization and your immediate family later on.

Conclusion

There is no doubt that donating to charity is a way to give back to the world after your time. But it involves a lot of intricacies that must also be taken care of. This ensures that no one falls into a tough spot because of your decisions, be it the charitable cause you are funding or your family. It is extremely important to be clear about your intentions of donating and discussing the matter with your other beneficiaries. Communicating your decisions beforehand can save everyone the trouble of going through probate litigation and conflicts in your absence.

If you do need the help of a litigation lawyer for probate in Miami, Luis E Baretto & Associates, P.A. is here to assist you. Our firm specializes in estate planning, trusts, wills, probate administration, and much more. With some of the best probate litigation lawyers in Miami on our team, we can help answer all your queries. Get in touch with us today to know more.