Estate Planning in New Jersey can be a complicated task. Often, when considering who will benefit from your assets in the future, you think of loved ones. However, another option is to donate assets, property, or cash to charities and organizations in addition to your established list of beneficiaries. There are many ways of doing this. It is important to consider all of your options and choose what is best for you. When in doubt or if you have any questions, it is wise to consult an attorney.
What are Charitable Gifts?
Charitable gifts are when you choose to give property, assets, cash, or something of value, to a charity or nonprofit organization. This is most often done through a Will or trust. When using these methods, ensure that you are very specific in naming charities or organizations to make sure that your gift is given to the correct charity. You can either name a specific purpose for the gift, or you may leave it as a general gift and allow the charity or organization to determine where it can be best put to use. Gifts are important to charities and non-profit organizations because in estate planning in New Jersey those gifts are exempt from tax.
If you have decided you want to include charitable gifts in your estate planning process, you will need to consider what type of gift you wish to use, as well as the effects this might have on your own assets.
What are the Benefits of Charitable Gifts?
Charitable gifts are beneficial to both parties. Of course, the main benefit is that you are able to provide funding or property for a worthy organization or cause that you care about. Secondarily, there are tax exemptions that may apply to both the charity and you. Depending on the circumstances, you might also be eligible for estate tax deductions or deductions during your life time.
What Types of Charitable Gifts are there?
Knowing your options when making a charitable gift is important. You’ll want to consider what you have to offer, what will be the best for the charity or organization you are donating to, and what method best accommodates those circumstances.
The primary way to include a charitable gift in your estate planning in New Jersey is to provide a specific monetary devise. By detailing a specific amount of money, you want to go to a charity in your will, you are able to provide funding for the charity of your choice. This is generally the simplest approach. Many organizations can also record your expected donation and ensure your preference for how the funds are used upon your passing.
Another method is to gift assets. This can include specific items such as cars, art, or other valuable items that an organization can either put to use or sell for funding. It may also include stocks and bonds, which many charities accept in the form of donations. You can even donate your life insurance to some organizations.
To gift any of these, you can add a bequest to the charity of your choice in your will. Other common methods are charitable lead trusts and charitable remainder trusts. In both types, assets are transferred to a trust. With a charitable lead trust, the organization chosen will receive cashflow from the trust in fixed amounts. Anything that remains will go to listed beneficiaries. On the other hand, a charitable remainder trust distributes cashflow to other beneficiaries for a fixed period of time, either a set monetary amount or percentage. The “remainder” is then for the benefit of the designated charity or nonprofit.
While these are the basic ways to include charitable gifts in your estate planning, there are many more avenues you can take.