Supporting charities through estate planning

For many people, the ability to financially contribute to and support a charity is something they value greatly. There are many ways that this may be accomplished, and a solid estate plan offers people many options from which to choose. These options provide the flexibility to balance the need to also provide for oneself or one’s family members as well as supporting a charitable cause. 

As explained by Fidelity Investments, some people may choose to make financial donations to organizations while they are still alive and utilize the appropriate tax benefit of doing so. The creation of a private foundation may also offer the ability to support a charity while still alive and retain other assets for relatives after death. There are also two special types of trusts that allow funds to flow to a charity and to other parties. 

Via a charitable lead trust, a person may allocate funds or assets for receipt by a charitable organization while they are still alive with the remainder of the trust’s assets passing to their estate or specific heirs upon their death. A charitable remainder trust, on the other hand, essentially flips that model and allows funds or assets to flow to an heir or to oneself with the remainder passing to a charitable organization. 

According to SmartAsset, when utilizing a charitable remainder trust, the person must identify the duration for which they or their heir shall receive assets. If this is for a designated number of years, the maximum allowable duration is two decades. Assets may also be allocated for the life of the recipient. 

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