Charitable Estate Planning in Lancaster, PA

A well planned estate from a stewardship perspective, will almost always include charitable giving.

Working at desk

EDUCATING YOURSELF

What is a registered investment advisor? A Registered Investment Advisor (RIA) is an advisor or firm engaged in the investment advisory business and registered either with the Securities and Exchange Commission (SEC) or state securities authorities. LSA is an Independent RIA

READ MORE >

Charitable Estate Planning

Generous givers want to know that some of their hard earned assets will be used for their best heartfelt purposes.

Charitable Estate Planning is the Result of a Life Well Spent

Charitable Estate Planning is the result of a life well spent, and of being generous. There are five fundamental Biblical Principles of Financial Stewardship that you probably would have formed into good habits over your lifetime. Here are the Five Biblical Principles of Financial Stewardship.

1. Spend Less than You Earn

2. Avoid the Use of Debt

3. Plan for Financial Margin by Building Liquidity

4. Set Long Term Investing Goals

and finally,

5. Give Generously

People in a position to give generously understand good stewardship, which has enabled them to accumulate much. They now need to plan for the ultimate distribution of their estate, and that often includes a significant charitable component.

How Charitable Gifts are Taxed During Life as vs. After Death

Charitable gifts are significantly different during life than after death from a tax perspective. During life, the gift results in a reduction of adjustable gross taxable income due to the tax deduction you would receive. After death the charitable gift is a deduction against the potential estate tax. Most estates today don’t have a federal estate tax problem so the benefit has less significance. An old adage, “Do your giving while you’re living then you’re knowing where its going” has greater tax and intrinsic benefits.

What are the Benefits of Making a Charitable Gift Through a Trust?

Making a charitable gift through a trust, (note there are various kinds), has several benefits. Some are mentioned below. First “in kind” highly appreciated assets of any sort can be sold via the trust without any capital gain tax consequences. A gift to a charitable trust is a completed gift and a tax deduction is realized. Once a trust receives a gift it is removed from an otherwise potentially taxable estate lessening that burden. An income stream, possibly for life, can be a significant component if drafted carefully.

Are There Any Specific Funds Which Are Most Beneficial to Will a Charitable Gift From?

Some assets/accounts are always better to gift than others. To start, anything that would result in high taxes to people are the first best target. IRAs passed through an estate would have inheritance and income tax consequences. Charities experience none of those taxes. You can direct IRA required minimum distributions (RMD) directly to charities keeping you from paying the income tax. Highly appreciated assets that are gifted to charity have no capital gains tax associated with them, which can be significant.

What is a Charitable Gift Annuity?

A Charitable Gift Annuity (CGA) works like an ordinary annuity in that it is intended as a “secure” asset” that is designed to provide a lifetime income stream now or in the future. A traditional annuity would provide income to an individual for life or a specific time period guaranteed by an insurance company in the form of a contract. A person could receive a benefit at death. A CGA is an agreement with a donor and a charity that provides an immediate or deferred income stream backed only by the ability of the charity to make payments.The residuum left in the CGA at the death of the donor goes to the charity.

What is the Difference Between a Trust and a Foundation?

A trust is an entity that exists for a specific purpose. There are three functions within a trust, an administrator, someone to manage the assets in the trust and the trustee. The trust typically is designed to benefit someone or an organization. The trustee has the greatest power. A foundation is out of the individual’s hands completely. There are either private or public community foundations with different tax structures and yearly requirements. Making direct donations to worthy organizations, such as your church, is recommended as a part of regular giving. A Donor Advised Fund (DAF) is an excellent alternative for ongoing gifting with much greater flexibility for future gifting.

How to Ensure that Charitable Funds Are Being Used Effectively

Knowing that our gifted funds are being used properly should be a fundamental consideration. In the past, older generations never questioned leadership and gave freely without accountability. Subsequent generations have demanded transparency and expected results. Current generations are lesser givers overall. Every spending and giving decision should be a prayerful decision. So before you give, seek wisdom and try to know your organization, its leadership and profound purpose. Then simultaneously seek the guidance of the Holy Spirit for discernment.

How Can I Ensure that my Charitable Gifts Will Have the Greatest Impact?

We will never be able to absolutely ensure that our charitable gifts will have the greatest impact. Most importantly we should never try to qualify, “what is the greatest impact“. I heard it recently said that it is the belief of some Christian leaders that Generosity has been hijacked by Organized Philanthropy. Instead of cultivating generosity, we’re trying to get the best ROI. Rather we should be teaching people to cultivate an attitude of gratitude which will lead us to becoming much more generous and consequently better overall and wiser givers.

What Makes Life Stewardship Advisors a Great Choice for Charitable Estate Planning

Most Charitable Estate Planning is relatively simple. People like to include a charitable bequest in their will or assign charities as beneficiaries in their contracts. But you have to be careful to know which assets are probated and those that are not. So having a firm with charitable estate planning experience such as LSA is of great benefit to be sure the estate is most efficiently distributed. Most firms never get involved with sophisticated charitable estate planning counsel which always involves a dedicated knowledgeable team. LSA has had the privilege to coordinate multiple estate planning strategies that have involved appreciated gifts in kind such as land or business interests.

How to Get Started with Charitable Estate Planning

Getting started with a charitable estate plan is indicative that you already have charitable intent. The next step is to begin to have a series of meaningful conversations with an advisor about, “What is so important about Giving to You”. Prov 20:5 says, “The purposes of a man’s heart are deep waters, but a man of understanding draws them out”. LSA exists to provide that counsel with the expressed purpose of helping every client become the best Life Steward of all that God has entrusted to us.


Contact us today for a free initial consultation.