“Planning a major donation for charitable giving can have many benefits, both for the receiver as well as the giver,” says Clancy Cramer, Financial Planner at Member Benefits. “The good news is that you have a number of options to help make a long-lasting difference to the causes you care about.” Here are a few to consider.
Charitable Remainder Trusts (CRTs)
A CRT is a tax-exempt irrevocable trust designed to reduce the taxable income of individuals. It dispenses income to one or more noncharitable beneficiaries for a specified period, then donates the remainder to one or more charitable beneficiaries.
Charitable Lead Trusts (CLTs)
CLTs provide payments to a charity for a set number of years, and once the term ends, the remaining assets go to the donor’s heirs. This may help minimize estate taxes.
Qualified Charitable Distributions (QCDs)
People over 70½ can make tax-free charitable donations directly from their IRAs. These can count toward required minimum distributions for those 73 and older. QCDs are tax-free as long as they are paid directly to the charity and you retain a receipt of the donation.
Bequests and wills
Leaving a portion of your estate to charity through a will or living trust is a common way to make a lasting impact. You can designate a specific amount or percentage of your estate to go to a cause you care about.
“It’s a good idea to research charities to ensure their contributions are being used wisely. Charity Navigator is one example,” adds Clancy. “To help make the most of giving financially, be sure you understand the tax advantages of charitable donations. The financial advisors at Member Benefits can help you learn more and go over donation plan options. Contact us for an appointment, we’re happy to provide more information.”