Estate plans that involve making contributions to charitable organizations can be structured so that they provide for a charitable organization after one passes away or during the donor’s lifetime. There are a variety of estate planning tools for making charitable gifts with each having unique characteristics and advantages. Our experienced New Mexico Estate Planning Attorneys at Jay Goodman and Associates carefully evaluate our client’s objectives and concerns so that we can customize the best estate planning approach to making a charitable contribution.
Charitable contributions not only permit donors to support causes they consider worthwhile but also provide protection from creditors, tax benefits and long-term care spend-downs. Some common estate planning tools that our New Mexico estate planning lawyers employ, which involve charitable contributions, include family foundations, charitable lead trusts and remainder trusts.
Charitable Remainder Unitrusts (CRUT):
This form of trust permits a fixed percentage of the value of the trust assets to be distributed to the person who creates the trust or a designated non-charitable beneficiary during the lifetime of the person who establishes the trust. Once a preset period of time has passed or upon death of the party who establishes the trust, the remaining assets are distributed to the designated charitable organization.
Charitable Remainder Annuity Trust (CRAT):
Assets like real estate, securities and money are placed in the trust that pays the holder of the trust a percentage of the value of the trust assets during the recipient’s lifetime or for a designated number of years. When the term expires or the recipient of the income dies, the assets in the trust are given to the charitable organization.
This form of charitable contribution organization is designed to contribute to a range of charities often over multiple generations. Family members can work together in these endeavors and receive compensation for their role in the organization.
Charitable Lead Trusts:
When this type of trust is utilized, a portion of the trust’s income is distributed to charitable organizations, which reduces one’s taxable income. After a designated period of time, the remainder of the assets in the trust is distributed to one’s beneficiaries without tax liability being incurred.
While individuals and families with a high net worth may benefit from establishing a 503(c)(3) faith based or charitable organization, the form of the charitable organization should be customized to fit the needs and goals of the party who creates the gift giving estate planning device.
The above information is designed solely to illustrate general principles of law, and does not constitute a specific legal opinion on individual cases. We suggest that you contact experienced legal counsel for a specific opinion tailored to your individual circumstances.
Jay Goodman and Associates can analyze your situation and recommend the option best suited to your needs. The Albuquerque Estate Planning Law Firm of Jay Goodman and Associates offers a free consultation in our centrally located offices in Santa Fe and Albuquerque so that we can discuss your options. Call us today to schedule your free consultation at (505) 989-8117 to learn about your rights.