No one enjoys thinking about what will happen when they die, but estate planning can avoid many complications for your family. More importantly, you can make your wishes known for the end of your life and ensure your legacy is solidified. While the primary purpose of estate planning is to ensure you and your family are taken care of, you do not have to limit your plans to only financial matters. You can also use estate planning to pass on your values and highlight your principles.
While many people prioritize charitable giving each year, many forget to plan for charitable gifts as part of their estate plan. Charities cannot be heirs to an estate unless expressly named in a will or as a beneficiary in a trust agreement. Consequently, it is crucial to discuss including your favorite charities in your estate plan with your estate planning attorney.
- Donate Assets: Your estate plan can donate assets like art, stocks, cars, or other assets to charities of your choice.
- Charitable Gift Annuity: You can purchase a charitable gift annuity. The annuity pays a fixed percentage of the gift each year, with the balance paid upon your death.
- Life Estate Deed: You can create a life estate deed for property you need to retain until death. Upon your death, the property can pass to the charity.
- Fund Beneficiary: You can name a charity as a beneficiary of your retirement plan or life insurance, and the funds will pass directly to the charity upon your death.
You can also name a charity as a trust beneficiary or create a trust specifically for a charitable purpose. In some cases, you can even include conditions in a trust for family members to encourage pro-social behavior.
- Charitable Remainder Trust: With this trust, you or people you designate can receive the trust income for a certain number of years or your lifetime. When the trust term ends, your designated charities receive the remaining assets.
- Charitable Lead Trust: Conversely, with this trust, charities you designate can receive the trust income for the trust term. When the term ends, your beneficiaries receive the remaining assets.
- Incentive Trusts: While not a specific type of trust, an incentive trust refers to using incentive clauses in a trust to motivate positive behavior, specifying that the beneficiaries may only receive funds upon fulfilling a condition. Incentive clauses can help pass values down to your heirs by encouraging education or charitable giving. Incentive clauses can also discourage self-destructive behaviors like drug abuse or encourage positive behaviors by matching savings or matching salaries for a socially-relevant occupation.
If you would like to donate a substantial amount to charities or fund ongoing work, creating a family foundation or donor-advised fund may be an option. You can set up the foundation during your lifetime and donate amounts for specific charities to the foundation. After your death, the foundation can continue to fund your charities or causes of choice.
If you are revising an estate plan or just beginning the process, Hegwood Law Group can provide many comprehensive estate planning services. Call us at (281) 885-8826, or click here to schedule your consultation.