People have been telling you that it’s important to create a will. But why, you may ask? Preparing to dispose of your assets after your death has many benefits—for you and for your loved ones. For example, it saves your family time and trouble because it streamlines the settlement of your estate. This means your beneficiaries will receive their inheritance more quickly, with less hassle. When you clearly state your intentions, it spares your loved ones by preventing arguments between them. And it helps to ensure that your wishes for your assets are honored. Without a will, the state will decide who inherits your property. And when you prepare your will, it’s incredibly beneficial in several ways to think about naming one or more reputable charitable organizations.
Consulting an estate planning attorney is crucial to navigate the complexities of charitable giving in your estate plan and ensure that your philanthropic intentions are fulfilled effectively and in a tax-efficient manner. Our attorneys at Chamlin, Uliano & Walsh utilize all of our knowledge and experience in New Jersey law to help you create a comprehensive estate plan that reflects not only your wishes for your assets, but also your core values. Call us at 732-440-3950 for a consultation regarding your individual priorities and long-term plans for donating through your estate.
Incorporating Charitable Donations into Your Estate Plan: A Win-Win Strategy
Giving to causes you care about offers many benefits. Supporting causes that align with your values also means that your resources will be used in ways that are important to you, reflecting your personal beliefs and goals as you leave behind a positive influence. It also helps build a legacy that demonstrates what you cared about during your lifetime and allows you to support the cause or causes you care about most long after you’re gone. This can be inspirational to others, encouraging them to support important causes and creating a culture of giving and generosity. Using your will or another estate planning mechanism to donate to charity can also help reduce the taxes your loved ones have to pay after you pass away. This means more of your money goes to your loved ones. Ultimately, it helps you make a lasting impact on the world. The people who are served by charitable organizations benefit exponentially from your philanthropic wishes upon your death. The following further explains some of the key advantages of integrating charitable giving and estate planning for you and for others.
The Tax Advantages of Charitable Giving in Life and After Death
Using your will to give to charity can reduce the amount of your assets that are taxable so that your family might owe less in taxes after you pass away. Also, if you set up certain types of trusts, or donate appreciated assets like stocks or real estate, you can avoid paying capital gains taxes on those assets. Making charitable donations during your lifetime can also lower your yearly tax bill.
Planned Giving Through Your Estate Reflects Your Values and Inspires Generosity
The donation you make through your will might fund scholarships, medical research, community programs that transform lives. By donating through your will, you make sure that your values and interests continue to make a difference even after you are gone. This kind of giving can also encourage others to donate, spreading generosity throughout your community.
The Legacy-Building Benefits of Charitable Donations in Estate Planning
Including charitable donations in your will or trust can help you build a lasting legacy. It shows your loved ones and your community what you valued most during your lifetime. Your donation can also inspire your family to be generous and support their community in their turn. It sets a positive example for your children and grandchildren, showing them the importance of giving.
Overview of the Types of Charitable Donations in NJ
Various charitable giving options are available in New Jersey, each with its own legal and tax implications.
Bequests in a Will or Trust Entail Specific Legal and Tax Implications
There are different types of bequests you can make. A specific bequest is when you leave a specific item or specified amount of money to someone. A general bequest is when you leave a percentage of your total assets to a person. A residuary bequest gives whatever is left of your estate after other bequests and expenses are paid. A contingent bequest only happens if certain conditions are met, like leaving money to a relative if they outlive you. To make any of these bequests, you need to include it in a written will or trust. In New Jersey, you must sign a will and have it witnessed by at least two people. A trust has a different set of legal requirements. You need to name an executor (for a will) or trustee (for a trust) who will make sure your wishes are carried out.
In New Jersey, there is no estate tax, but there is an inheritance tax for some beneficiaries. Close family members like spouses, parents, and children are usually exempt from this tax, but other relatives or friends may have to pay it. Working with an estate planning attorney such as those on our team, can help you ensure that your will or trust is legally sound and reflects your wishes.
Charitable Remainder and Lead Trusts to Reduce Taxes and Support Your Legacy in New Jersey
In a Charitable Remainder Trust, you give money or assets to the trust, which then pays income to you or someone you choose for a set period. After that period ends, whatever is left in the trust goes to the charity. This is an income tax and estate tax strategy. Another type is the Charitable Lead Trust. This trust works the opposite way. It gives money to a charity for a certain period, and then the money goes to your named beneficiaries. This too helps lower gift and estate taxes. It’s important to choose a good trustee who will manage your trust responsibly. Because charitable trusts can be complex, it’s a good idea to get help from a lawyer who knows about New Jersey’s laws and can make sure your trust works the way you want it to.
Charitable Gift Annuities Offer Lifelong Payments and Benefits
A Charitable Gift Annuity works like this: you donate assets to a charity, and in return, the charity gives you regular payments for the rest of your life. When you pass away, the remaining money goes to the charity. In New Jersey, there are both federal and state rules for Charitable Gift Annuities and this is a complex area of giving that requires thorough understanding of your financial and tax responsibilities and options.
Private Foundations Can Maximize Your Impact By Giving Strategically
A private foundation is a nonprofit organization to which a person, family, or company provides most of the money. This foundation then gives grants to charities or causes based on the preferences of the founder. One of the main benefits of a private foundation is that you can choose which causes or organizations get support. In New Jersey, private foundations have to follow both state and federal rules in order to operate legally and responsibly.
Understanding Qualified Organizations to Ensure Your Charitable Contributions Are Tax-Effective
In estate planning, a “qualified organization” is a charity or nonprofit group that meets certain requirements so that donations to it can give you tax benefits. To be a qualified organization, the charity must have gained a 501(c)(3) status from the IRS. It must operate for charitable, religious, educational, scientific, or literary purposes. The organization must also be set up to help the public, not just a private individual or family.
Qualifying organizations include:
- Community foundations
- Veterans’ support organizations
- Fraternities, sororities, orders, and associations, if created to benefit the community
- Possibly a nonprofit cemetery company
- Houses of worship
- Nonprofit schools
- Nonprofit hospitals
- Nonprofit organizations like Orbis, Doctors without Borders, Salvation Army, United Way, or Red Cross
- Any level of government—that’s if the funds are for public benefits (like parks).
Political donations do not qualify, nor do gifts to individuals.
Speak to an Attorney at Chamlin, Uliano & Walsh About Including Charitable Gifts in Your Estate Plan in Rumson, NJ
When you want to incorporate charitable giving into your estate plan in New Jersey, the highly knowledgeable estate planning lawyers at Chamlin, Uliano & Walsh possess the skills and dedication to guide you through this process and ensure that your charitable gifts are passed in the manner that most benefits you, your loved ones, and the world. We help clients like you in Eatontown, Long Branch, Neptune, Belmar, Manasquan, Holmdel, Middletown, Red Bank, and throughout Ocean and Monmouth County and Southern New Jersey, to navigate estate planning, including using charitable donations to leave a lasting legacy. If you would like to discuss your particular goals and values and how to reflect them in your charitable estate planning decisions, contact us today at 732-440-3950.