Designating a charity in your estate plan in Florida is a great way to make use of your wealth while also minimizing the federal tax impacts on your family. However, there are many different routes to achieving this. What is best for one family may be different from what is best for yours.
In this blog, our estate planning lawyers will explain the common routes to putting a charity in your estate plan in Florida:
Disclaimer: This blog serves as an introductory guide. All tax-related decisions should always be assisted via consultation with an estate planning lawyer.
Why Put a Charity in Your Estate Plan?
The primary reason people put a charity in their estate plan in Florida is due to philanthropic intentions. This is a very gratifying and wonderful reason, but there may also be other motivations.
Although Florida does not impose inheritance taxes, the IRS does. If your estate value exceeds the applicable threshold, then donating a share of your estate to a tax-exempt charity would reduce its overall value. This could potentially save your family a vast tax bill.
Another reason is to preserve assets for your family’s future generations. For example, a Charitable Remainder Trust can accomplish this by using standard tax-advantaged retirement accounts such as 401ks and IRAs. The trust becomes a beneficiary, providing selected family members with annual income payments. After they pass away or the time period expires, any remaining assets are donated to charity.
Ways to Put a Charity in Your Estate Plan in Florida
Put It in Your Will
Naming a charity in your will is considered the simplest way to put a charity in your estate plan. You can designate the percentage of your estate that you’d like to leave to it, just as you would with other beneficiaries such as your children. You can even write provisions such as only leaving money to a charity if your children have passed away.
Putting a charity in your estate plan in Florida through your will means the funds will be donated after you die. However, it will limit the control you have over how the assets or funds are used by the charity.
Via a Charitable Remainder Trust
Creating a charitable remainder trust is a nice option if you want to donate while you’re still alive. You can make tax-free donations and reduce your taxable income too.
Trusts are entities that hold ownership of assets and funds, operating in the best interests of beneficiaries. Charitable remainder trusts are irrevocable, so they can’t be amended once created. But, they can still provide a potential income stream for the other beneficiaries.
They work as follows:
- The trust creator donates assets or funds to the trust.
- The trust pays non-charitable beneficiaries an income for a specified period of time.
- After the specified period of time, the remaining assets of the trust are donated to the desired charity or charity.
- The trustor can receive a charitable income tax reduction for the remaining amount.
If you are interested in creating a Charitable Remainder Trust in Florida, please contact our Florida trust planning lawyers today.
Using a Charitable Rollover from Your IRA
You can also benefit from a charitable tax break for IRAs. You can give up to $100,000 per year to charities directly from your IRA, with the amount counting towards any required minimum distributions (RMDs).
RMDs require you to take from retirement accounts when you reach the defined age. But if you give the funds directly to your charity of choice from your IRA, it will be considered a qualified charitable distribution (QCD) – excluding the amount from your income taxes.
Gift to a Community Foundation
The use of a community foundation allows you to donate to good causes via your own charitable fund. With this, you can donate to anyone you want, for however long you want and under your own terms.
Foundations provide maximum impact and tax benefits but are also great for anyone looking to passionately focus their gifting to causes of specific needs. They are common in creating a legacy after the death of a loved one who suffered an illness or had a big impact in a specific community. For example, “The John Smith Cancer Foundation”, or “The Jane Doe Science Education Foundation”.
Gift Your Assets
You can also put a charity in your estate plan in Florida via non-cash gifting. Common examples include real estate property, cars, collectibles and jewelry. This is especially common with vacation homes, farms and condos as the owner can gift it to charity while still reserving its lifetime use.
Gift Appreciated Stock
An easy way to make a high-value donation to charity in your estate plan is via appreciated stock. When you donate appreciated stock that’s held for over a year, you’ll avoid paying capital gains tax on your holdings.
Use a Life Insurance of Charitable Gift Rider
If you name a charity as a beneficiary on your life insurance policy, the charity will receive the proceeds just as your family usually would. This option also allows the funds to bypass probate in Florida.
Charitable gift riders also present another route to donation, as they pay a percentage of the policy’s face value to a qualified charity. However, they can limit how much you can give.
Donor Advised Fund or Annuity
Using a donor-advised fund or annuity allows for easy gifting but removes the ability to still own the assets. However, you can direct how funds are used and choose the beneficiaries.
Do I Need a Lawyer to Put a Charity in My Estate Plan in Florida?
It’s highly advised that you hire a lawyer when putting a charity in your estate plan in Florida.
Estate planning is complex, especially when it comes to anything related to taxes (such as asset gifting). Our lawyers can also assist in optimizing your estate, so you can take advantage of asset protection and protect your family’s wealth for generations to come.
Finally, we will take care of all the complicated and daunting paperwork so your visions can become a reality without the stress and legal complexities getting in the way.
Contact a Charitable Remainder Trust Attorney Today in Pinellas County and Hillsborough County
If you want to put a charity in your estate plan in Florida, contact our expert legal team today for a free assessment.
We regularly help wealthy families fulfill their philanthropic visions while still protecting their loved ones in the long term.
Battaglia, Ross, Dicus & McQuaid, P.A. is U.S. News and World Reports Tier 1 law firm in Florida, specializing in Estate Planning & Probate since 1958. With Award-winning experienced estate planning attorneys, they can help you create an estate plan that protects your rights and wishes.