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Integrating Philanthropy In Estate Planning

May 2022

Integrating Philanthropy In Estate Planning

Greg Rodgers, Assistant Vice President

Philanthropic giving can be a key part of your estate plan. It can help you accomplish your charitable goals and potentially create meaningful tax savings for your estate.

Assets that properly pass to a qualifying charity are not subject to any tax. This includes structures such as a donor-advised fund or private foundation. For large estates over the lifetime exemption, this can ease the tax burden in the estate while providing funds for a good cause.

Another fiscal benefit to working philanthropy into your estate plan involves recent changes to IRA laws. When a beneficiary inherits an IRA, the funds must be distributed over 10 years, and this can create unintended tax consequences. If you pinpoint a charitable beneficiary for your IRA accounts, on the other hand, you can optimize the net after-tax value transferred to the next generation.

Additionally, the use of private foundations and donor-advised funds also allows for tax-free growth and distributions (assuming distributions go to qualifying charities). Along with annual compounding, this can make a significant difference in the amount charities receive.

Incentives Beyond Financials

Folding philanthropic giving into your estate plan often makes financial sense, but the value doesn't stop there.

Charitable giving also allows you and your family to continue making a difference in your community for years to come. By setting up an efficient donation vehicle as part of your estate plan, you can help improve people’s lives for decades. Continuing to set aside funds for a charity close to your heart can ensure that your money goes where you want, even when you're gone. In other words, your consideration becomes a treasured legacy that your children, grandchildren, greatgrandchildren, and other relatives will continue to honor.

Never underestimate how proud your relatives will be to support social issues that are important to you. Often, we have heirs express appreciation knowing that they have a way to fulfill their parents’ deepest charitable wishes through annual gifting. They often end up giving even more as part of their own estate plans.

Does Philanthropic Giving Belong in Your Estate Plan?

Whether you give to a few charities or dozens of nonprofit organizations, you might want to learn more about the connection between estate planning and philanthropy. Our team specializes in charitable giving techniques that helps you optimize your estate plan. A few options we can evaluate together are direct giving, donor-advised funds, and private foundations.

Together, we can set up estate planning scenarios to determine which planned giving method would be ideal for your estate plan. When considering direct giving, we can help identify charities that will fulfil your intent. If a donor-advised fund better suits your needs, we can establish the account on your behalf and select the most appropriate securities for the fund to maximize the tax benefits. Lastly, if a private foundation is appropriate for your estate plan, we can ensure the foundation’s operating structure is suitable and help you determine the proper funding method.

Sophisticated estate planning can allow you to stretch your charitable giving into the future — and into future generations of your family. Please contact us if you are interested in learning more.

Greg Rodgers helps our clients navigate complex tax and estate planning issues as a Trust & Family Office Advisor. A dedicated client advocate, he is focused on the best interests of each client.

Greg Rodgers Headshot
Greg Rodgers
Assistant Vice President
Trust & Family Office Advisor

DISCLAIMER: This newsletter is intended to provide thought-provoking commentary. The information presented herein has been obtained from and is based upon sources and vendors deemed to be reliable, but may be incomplete. Parkside Financial Bank & Trust does not itself endorse or guarantee, and assumes no liability for, the accuracy or reliability of any third party data or the financial information contained herein.
Parkside Financial Bank & Trust is not a tax advisor. All decisions regarding the tax implications of your investments should be made in consultation with your independent tax advisor. We will work with you independent tax and/or legal advisor(s) to help create a plan tailored to your specific needs. The material contained herein is for informational purposes only and does not constitute tax advice.
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