Charitable planning can provide immediate gains in the form of tax savings, deferred taxes, and the arrangement of income, gifts, or annuities with minimized tax penalties. Continue reading to discover the varying types of charitable gifts and how an experienced Red Bank, New Jersey trusts attorney at Margaret M. Mahon, Esq. LLC can help you start the process.
What are the different types of charitable gifts?
Ultimately, the best type of charitable gift to select depends on your goals in regards to how much you intend to donate, how much control you want over it, and what tax benefits you want to receive. The different kinds of charitable gifts read as follows:
- Charitable remainder trust: an irrevocable trust is funded with cash gifts or other gifted property. Their value is immediately deducted from income upon trust formation, and the trust can provide a tax-free income stream to you or your spouse. Another preferred party can be designated to receive taxed income, instead. This income stream will last a set term of years, or throughout the lifetime of the recipient. Afterward, any remaining assets will be donated to the charitable organization of your choice.
- Charitable gift annuity: similar to a charitable remainder trust, except the charitable gift is made directly to a 501(c)(3) organization, and the organization determines the amount of the annuity based on actuarial calculations.
- Charitable lead trust: opposite of a charitable remainder trust. An irrevocable trust is funded with a cash gift or other gifted property, and then the value of the trust funds an income stream to a named charity for a select term of years. Once the term expires, the remaining assets held in trust are distributed to non-charitable beneficiaries.
- Donor-advised fund: a charitable donation to a third-party charitable organization, which can then release the funds via grants to the charitable organizations you desire. Through this, you can make regular contributions to qualified organizations on a monthly or weekly basis to maximize income tax savings.
- Private foundations: a nonprofit organization or a trust, funded solely by an individual, family, or enterprise. The foundation will be headed by either trustees or a board of directors. The foundation can directly control charitable operations, or it can provide grants to other operational charities and nonprofit enterprises.
If any of these charitable gifts are appealing to you, do not hesitate in reaching out to a skilled Monmouth County estate planning attorney today.
Contact Our Red Bank, New Jersey Firm
The planning and administration of an estate require experienced legal guidance. If you need an effective attorney to assist you with matters of wills, trusts, and estates, or the taxes associated with them, contact Margaret M. Mahon, Esq. LLC today to schedule a consultation.