Charitable Giving in Your Estate Plan in Texas

 Posted on April 05, 2024 in Estate Planning

As a resident of Texas, you can make a significant contribution to the causes that matter to you by including charitable donations in your estate plan. By incorporating philanthropy into your estate planning strategy, you support the organizations and missions that matter to you and potentially reduce your estate’s tax burden. A Texas lawyer can help you explore how you can include charitable giving in your estate plan.

Charitable Bequests in Your Will

Incorporating charitable giving into your estate plan can be easily achieved by including a charitable bequest in your will. You can specify a particular dollar amount, a percentage of your estate, or a specific asset to be donated to your chosen charity upon your passing. This approach allows you to maintain control over your assets during your lifetime while ensuring that your philanthropic goals are met after you are gone.

Charitable Trusts

Charitable trusts offer a more sophisticated way to support your favorite causes while potentially enjoying tax benefits. There are two primary types of charitable trusts:

• Charitable Remainder Trusts (CRTs): In a Charitable Remainder Trust (CRT), you transfer assets into the trust, providing you or your designated beneficiaries with an income stream for a set term or life. The remaining assets are given to your selected charity when the trust ends.
• Charitable Lead Trusts (CLTs): A CLT works opposite to a CRT. The trust disburses payments to the charity you have designated for a set term, after which the remaining assets are allocated to your beneficiaries or returned to you.

Both CRTs and CLTs can provide you with tax deductions and help you minimize estate and gift taxes while supporting your favorite charities.

Beneficiary Designations

Another easy way to include charitable giving in your estate plan is by naming a charity as a beneficiary on your retirement accounts, life insurance policies, or bank accounts. By doing so, you can support your chosen organization without the need to modify your will or create a trust. Simply contact your account administrator or insurance provider to update your beneficiary designations.

Donor-Advised Funds

If you want to make charitable contributions during your lifetime while maintaining flexibility, consider establishing a donor-advised fund (DAF). A DAF is an investment account designed for charitable giving. You can contribute cash, securities, or other assets to the fund and receive an immediate tax deduction. You then recommend grants from the fund to your chosen charities over time. This approach allows you to separate the timing of your tax deduction from your actual charitable donations.

Private Foundations

Creating a private foundation may be an attractive option for those with substantial assets and a strong commitment to philanthropy. A private foundation is a legal entity that you establish and fund, which then makes grants to charitable organizations. While private foundations offer a high level of control and visibility, they also come with more complex tax rules and administrative requirements compared to other charitable giving vehicles.

Contact a Fort Worth, TX Estate Planning Attorney

Incorporating charitable giving into your estate plan can be rewarding to leave a legacy and support the causes you care about. However, it is essential to consult with a Fort Worth, TX estate planning lawyer to discuss the overall strategy. Mr. Gonzalez is also a certified public accountant (CPA), so you will be in good hands. Call Gonzalez Law, PLLC at 817-349-7330 for a free consultation.