Some people are motivated to give or participate in philanthropic activities by different factors such as personal fulfillment, minimizing taxable amount, and sometimes giving for a legacy point of view. Charity activities are discussed at length during estate planning. Here are some of the tips that can help individuals taking part in estate planning to engage in philanthropic activities.
Working with Charitable Trusts
Charitable trusts provide individuals engaging in planning for their real estate to minimize taxes while at the same time participating in philanthropic activities. Contributing an asset with sufficient market value gives an opportunity for individuals to get income during their lifetime after which the asset will be transferred to the organization after their death. However, it is important to screen a charitable organization before donating the property as some of trusts are not reliable.
Preparing a Will
Carrie, who is an experienced real estate planner, encourages individuals to include philanthropic giving in their real estate plans by formulating a will. The only problem of using a will is that it will not reduce income taxes but will be very useful in reducing the liability for estate tax purposes. This strategy will play a vital role in maximizing the value of the real estate property that the heirs will receive.
Consulting an Expert
Incorporating charitable giving in a real estate plan is a complex undertaking, especially when an individual wants to minimize taxes. Therefore, working with a professional real estate planner, who has vast skills and knowledge about philanthropic giving will help in calculating the complex numbers that are involved. He or she will also help a person to build a real estate plan that will optimize an individual’s tax impacts.
Donating Retirement Accounts
People planning to participate in philanthropic giving when planning their real estate can consider giving their retirement accounts to a charity organization of their choice. This strategy involves designating a particular charitable entity as the beneficiary of the retirement account. This strategy allows the charity to receive 100% of the retirement account’s value after liquidation because it is exempt from paying both estate and income taxes. The policy will also allow an individual to leave their heirs with non-retirement assets, some of which will not attract the same tax burden.
