Share the ❤️ Valentine’s Day
with Planned Giving
At Rebecca Mason Law, we believe in celebrating love not just with flowers and chocolates (and here in Racine, Kringle) but also through acts of kindness that extend beyond our lifetime. This Valentine’s Day, as we experience the joy of giving, let’s also consider Planned Giving as a way to continue our generosity towards the community we cherish.
Planned Giving refers to the thoughtful inclusion of charitable gifts in your estate planning documents, ensuring that your support for meaningful causes lasts well into the future. While many of us are familiar with donating to local charities, incorporating Planned Giving into our estate plans allows us to leave a lasting impact on the causes we care about the most.
There are several avenues for Planned Giving within your estate plan. You can choose to designate a fixed sum, a percentage of your assets, or even specify particular assets for donation. Among the most common methods are including charities in your Last Will & Testament or naming them as beneficiaries in your Revocable Living Trust.
When it comes to Wills and Trusts, it’s essential to understand the implications of each option. Bequests in your Last Will & Testament are subject to the probate process, which can take time to complete. Conversely, bequests in a Revocable Living Trust are handled outside of probate, often resulting in faster distribution of assets.
Another effective method of Planned Giving is through beneficiary designations. By naming a charity as a beneficiary on retirement accounts, life insurance policies, or other assets, you ensure that your chosen charity receives the full designated amount, bypassing potential probate delays.
Maximizing Your Impact
Many of our clients express concern about estate taxes and inquire about incorporating charitable giving to reduce federal estate tax liability. (Note: Wisconsin does not have an estate tax. If you are not a Wisconsin resident, there may be other estate tax considerations. click here for more information:)
Although charitable gifts can offset federal estate tax liability, the increases in the federal estate tax exemption have impacted the usefulness of this strategy for many. In 2024, the federal estate tax exemption was increased to $13.61 million for individuals and $27.22 million for married couples.
It will increase again in January 2025 to be adjusted for inflation. At the end of 2025, however, the exemption will be reduced to approximately $7 million for individuals and $14 million for couples (adjusted for inflation).
Nonetheless, Planned Giving still offers tax benefits. By directing funds from pre-tax IRAs to charities, you can ensure that the full amount of your gift benefits the charity while potentially minimizing tax liabilities for your estate or individual beneficiaries. This is because qualifying charities do not have to pay income taxes. Therefore, if you direct funds from your pre-tax IRA to a charity, the charity receives the full amount of the gift.
Ensuring the Correct Charity Receives (And Will Accept) Your Gift
When specifying charities in your Planned Giving, attention to detail is crucial. Providing the charity’s full legal name, Tax ID number, and address ensures that your gift reaches the intended recipient. Additionally, including language to address scenarios where the named entity or program no longer exists demonstrates foresight and ensures your charitable intent is fulfilled.
It is also common to inform the charity about your planned gift, as it allows them to express gratitude and address any questions regarding your intentions. Moreover, if you plan to gift assets other than cash, such as real estate or privately held stock, notifying the charity in advance can streamline the process and minimize delays.
Planned Giving is a meaningful way to express love and generosity, ensuring that your legacy of kindness lives on for generations to come. Whether through your Will, Trust, or beneficiary designations, your thoughtful contributions can make a lasting difference in the causes you care about most.
For more information on incorporating Planned Giving into your estate plan, contact Rebecca Mason Law to schedule a consultation.
Disclaimer:
Attorney Rebecca Mason is an estate planning attorney in Racine, Wisconsin. She is a lawyer, but not your lawyer. She also is not a tax lawyer. The information provided above is general in nature and for educational and informational purposes only. It does not, and is not intended to, constitute legal advice. Because the information is general in nature, it should not be relied upon as a legal opinion or legal advice regarding your specific issue or factual circumstances. Please consult with a qualified estate planning attorney to discuss your specific situation.
