Estate planning and charitable donations

While taking care of children, grandchildren and other relatives is often times an individual’s primary concern in estate planning, many people also focus on charities that are near and dear to their hearts. This altruism makes sense for many people designing an estate plan that fits their needs. In addition to the significant psychological benefits and other positive impacts donating to a charity can impart on a do-gooder, many people find themselves with few, if any, family members to whom they can leave an inheritance. While most people certainly enjoy passing assets down to loved ones, oftentimes the reality is those loved ones are financially independent and more than capable of thriving without a trust fund. This frees up assets for organizations and non-profits that are constantly in need of donations and charitable bequests.

Despite the need and the ability of individuals to give, national statistics show that charitable donations have been static. For instance, reports indicate that only 10 percent of wills contain a charitable gift, which is only up on about 2 percent from a decade ago. Similarly, charitable bequests have remained at approximately $22-25 billion over the past 10 years.

These anemic growth rates run contrary to the numerous benefits of charitable giving as part of an estate plan. Florida and federal laws provide for positive tax implications for those who choose to use charitable strategies to lessen their tax obligations. This financial reason is simply an added bonus to the psychological benefits associated with helping charitable causes.

Source: WealthManagement.com, “Engage Your Clients in Legacy Estate Planning,” Richard Newman, May 19, 2014