Planned Giving to Charities: Make a Difference While Reaping Benefits

A community-focused approach to estate planning often highlights mindful giving to charities. Partnering with an experienced Jacksonville estate lawyer can help you navigate the nuances of charitable giving while optimizing benefits for both you and the causes you support. Whether you’re looking to give back during this holiday season or throughout the year, understanding how to choose the right charities and maximize the impact of your contributions is crucial.

Charitable Giving Strategies with Tangible Benefits

As highlighted in a video by Jacksonville estate lawyer Bill O’Leary, certain charitable strategies within your estate planning allow you to support your preferred organizations while receiving benefits.

Below are four charitable giving methods to consider in your Jacksonville estate plan.

1. Qualified Charitable Distributions (QCDs)

Ideal for individuals aged 70½ or older with traditional IRAs, QCDs allow you to donate required minimum distributions (RMDs) directly to a charity. Benefits include:

• Avoiding taxes on the donated amount.
• Reducing taxable income, potentially lowering Medicare premiums and taxes on Social Security benefits.

2. Charitable Gift Annuities

This option involves donating a lump sum to a charity in exchange for a guaranteed income stream. Advantages include:

• Partial tax-free income.
• An upfront tax deduction.
• No market risk, offering financial stability.

3. Charitable Trusts

A charitable trust, either a remainder trust or a lead trust, offers tailored giving options:

• Charitable Remainder Trusts: Provide income to you or your beneficiaries for a set period, with the remainder going to a charity. Read more in our articles, How Do I Use a Charitable Remainder Trust with a Large IRA? and Does Artwork Belong in a Charitable Remainder Trust?
• Charitable Lead Trusts: Allow the charity to benefit first, with the remainder distributed to your family later.
  These trusts can yield significant tax benefits, especially when funding them with appreciated assets like real estate or stocks.

4. Donor-Advised Funds (DAFs)

DAFs are a flexible option for those wanting to manage their charitable giving over time. Contributions are tax-deductible upfront, and donors retain indirect control over disbursement decisions. Many financial institutions, like Fidelity and Schwab, offer these funds, simplifying the giving process.

How to Choose a Charity for Planned Giving in Jacksonville

When deciding where to donate, it’s important to choose mindfully while also budgeting your donations. A recent interview on NPR News noted that many people give in a reactionary way when they receive a direct giving request. However, by using a critical approach to giving, the benefits to both you and the charity have the potential to be much higher.  Use the checklist below to help decide which charitable organizations to select for your planned giving.

Identify Causes That Resonate with You

Start by reflecting on issues close to your heart. Ask yourself questions like:

• What personal experiences have shaped my values?
• Are there specific events or hardships that resonate with my family or community?

Charity Navigator suggests using these insights to sketch out a plan for giving. Whether it’s supporting religious institutions, animal shelters, educational programs, or health-related causes, this reflection ensures your donations align with your values. Read more in our article, How to Include a Charity In Your Estate

Research Potential Charitable Organizations

Leverage resources like Charity Navigator, GiveWell, or CharityWatch to evaluate a nonprofit’s financial health and transparency. Key indicators include:

• Reviewing IRS Form 990, which provides financial insights.
• Checking for publicly available annual reports and audits.

While larger organizations may demonstrate broad impact and stability, smaller, local charities often have a deep understanding of community needs and a more personal touch.

Set a Budget for Planned Giving

Determine how much you can afford to give without compromising your financial goals. Consider a percentage of your annual income or exploring smaller, recurring donations that collectively make a significant impact.