Many people in Illinois make a habit of donating to charitable causes. Besides enjoying the feeling that comes from helping others, giving back to charities also helps reduce tax expenses for you and your beneficiaries. Here are a few tips to help you benefit from making charitable giving a part of your estate plan.
Donating through a trust
You can choose to establish a trust and make a charity a beneficiary. This is possible with either a revocable or irrevocable trust. Another option is to set up a charitable lead trust, which allows you to donate to a charity while protecting any remaining assets for your beneficiaries. A charitable lead trust can also help you reduce capital gains taxes by storing appreciated assets, such as stocks or properties.
Another way to donate to charitable causes is through a donor-advised fund. These funds are typically managed by financial institutions, allowing you to donate to charities while minimizing your tax-related expenses. This option is good for those who want help with estate planning and making charitable donations.
You can also donate to a charitable cause through a retirement account. Retirement accounts are great for donors because charities that receive money from these accounts won’t pay taxes on what gets donated. Married individuals wanting to make charitable donations their beneficiaries might need to receive written consent from their spouses before this can happen.
To summarize, there are several beneficial ways to make charitable giving a part of your estate plan. Consider establishing one or more of the above accounts to reduce your tax expenses and maximize how much you can give back to charitable causes.