Charities and Foundations
There are several ways that a person may leave wealth to charity, including the following:
- The surviving spouse can donate assets outright to a charity during life or after death, and enjoy income and estate tax savings.
- A private foundation can be set up that qualifies as a charitable organization under Section 501(c)(3) of the Internal Revenue Code, allowing a full income tax deduction for the fair value of assets contributed to the foundation.(It is usually wise to time the gift with a high income tax year).
- The gift may be made to a Donor Advised Fund, which will administer the charitable donation for a fee.The individual loses some control over the management of the funds, but saves the headaches associated with running a foundation.
- Creating a Charitable Remainder Trust, which allows individuals to benefit from the trust by receiving an annuity during their life times, and to transfer the assets in the trust to charity after the death of the surviving spouse.
Charitable giving can accomplish helping a worthy cause and serving non-monetary family interests as well. Consider the following example.
An elderly women’s spouse had died of lung cancer. She wanted to donate some of her wealth to fighting cancer. She also wanted to involve her children in charitable giving. Maurice Kassimir & Associates, P.C. discovered that the woman had about $2 million in an IRA account, which would have been subject to approximately 80 percent taxation upon her death. Instead, the money in the IRA was left to a private foundation created for the benefit of the American Cancer Society that was not subject to income or estate tax. The woman was able to optimize the impact of her charitable giving, and create a vehicle for her children to be involved in the fight against cancer.
Contact the attorneys at Maurice Kassimir & Associates, P.C., for creative advice that helps you meet your estate planning goals, and allows you to maximize the impact of your charitable giving.