Many Tennessee residents are interested in ways to reduce their taxable estate and preserve wealth to pass down to their intended heirs. Often, leaving money to charity is an excellent way to meet those goals. In addition to the tax benefits of such contributions, charitable donations can also leave behind a legacy of care toward others, which is an estate planning approach that can influence loved ones for generations to come.
One of the best ways to give money to charity is by means of a charitable remainder trust, or CRT. A CRT is structured in such a way as to allow the creator to fund the trust with a range of assets. Once those assets are within the trust, a charitable income tax deduction can be used to reduce the amount of income tax due within that year. That deduction can be carried over into future tax years if the amount exceeds one's income.
Once an individual passes away, the designated charity or charities will be given a fixed percentage of the value of the trust. Charitable contributions can also be made through a remainder annuity trust, which can provide a fixed donation. There are a wide range of additional options for passing wealth to a charity, and a good fit can be tailored for any set of needs.
Aside from the tax benefits of leaving money to charity, many in Tennessee are drawn to the understanding that the wealth that has been accumulated during their lifetime can be put to use to serve the needs of others. In addition, provisions can be made within an estate planning package that can give one's heirs the wealth that remains within a CRT after charitable contributions have been distributed. This approach allows a family to educate the next generation on how to give back while also making wise financial choices.
Source: CNBC, "Donations: The gift that keeps on giving for donors", Shelly Schwartz, July 16, 2015