When you create your estate plan in Pennsylvania, you may consider leaving some of your assets to charity. This could be an especially attractive option if you are concerned about not having any heirs to leave your assets to but do not want your assets to go to waste.
In addition to knowing your assets will go toward charities whose causes you support, there are several other advantages to making charitable giving a part of your estate plan.
Tax advantages of charitable giving
Charitable giving allows you to reduce or avoid inheritance taxes. Assets left to certain charities through a will or trust are exempt from Pennsylvania’s inheritance tax.
Additionally, charitable giving can reduce the estate tax burden of your overall estate and allow you to take a federal tax deduction for your contributions.
There are various ways to incorporate charitable giving into your estate plan. You can gift money or property through a will or trust. Contributing other assets, such as stocks or investments that appreciate in value can help you avoid a capital gains tax.
Charitable trusts or foundations
You can also create a charitable trust. There are different types of charitable trusts you might consider.
A charitable remainder trust distributes income to your beneficiaries with the remainder going to charity, while a charitable lead trust does the reverse, distributing income to your charities of choice while distributing the remainder to your beneficiaries.
Another option is creating a private charitable foundation. The benefit of a charitable foundation is that it allows you to have some control over how your assets are used and which charities receive support. However, this is generally a complex and costly option.
If you decide to make charitable giving part of your estate plan, it is important to consult with professionals to ensure it is done correctly.
