Charitable Estate Planning – Leaving a Legacy
There are many ways to get tax benefits from charitable donations. However, not every person who makes charity a part of estate planning is doing so for the tax break. This is also the opportunity to make a real difference for a non-profit organization and leave a lasting legacy. What are the 3 major types of charitable organizations, and how can you make charity part of your estate plan?
3 Types of Non-Profit Organizations
For those who are also thinking about tax benefits of contributing, we’re going to go through this list in order from least tax advantages to the most.
- Private Foundations – These groups are usually privately funded by one family, although they may accept contributions from others. This is the simplest form of non-profit to organize and also has minimal tax benefits for donors. These foundations do not engage in charitable work directly but do forward funds to public charities.
- Private Operating Foundations – These foundations are still private, but they do engage in charitable acts directly. The main difference is the percent of funds that are privately contributed versus publicly.
- Public Charities – These are organizations that are funded by the general public. Less than half of their funds can come from large donations made by companies or individuals. These organizations are what most of us think of when we envision donating to charity. This is also the best way to get tax benefits from donating.
How to Leave Money to Your Favorite Charity
Depending on the charity itself, some may prefer a trust and others may prefer a donation via a will. The benefits of using a trust include the money avoiding probate. You can select one specific charity or an entire portfolio of non-profits that you would like to make a contribution to, so don’t feel tied down if you are having trouble deciding who to leave your contributions to.
Petrov Law Firm would be happy to help you make charity a part of your estate plan. Just call 619-344-0360 to schedule a consultation with one of our estate planning attorneys.