Charitable giving has often played a role in estate planning, but current trends are changing how people approach their donations. Individuals want to maximize the impact of their gifts while also considering tax benefits. Here are some of the latest trends in charitable giving within estate plans that are reshaping how people leave their legacy.
Donor-advised funds are growing in popularity
Donor-advised funds (DAFs) are one of the fastest-growing trends in charitable giving. These funds allow individuals to contribute money now and decide later which charities will receive the donations. DAFs offer flexibility and provide immediate tax benefits, making them an attractive option for those looking to plan for future charitable contributions.
Charitable remainder trusts for income and giving
Many people are turning to charitable remainder trusts (CRTs) as part of their estate plan. With a CRT, a person can place assets in a trust that provides income to them or their beneficiaries for a set period. After that time, the remaining assets go to the designated charity. This approach helps donors support causes they care about while also benefiting from a steady income stream.
Qualified charitable distributions from retirement accounts
Qualified charitable distributions (QCDs) are another trend gaining traction. Individuals over the age of 70½ can donate up to $100,000 per year directly from their traditional IRA to a qualified charity. This approach can help fulfill required minimum distributions while reducing taxable income, making it an appealing choice for retirees wanting to support charitable causes.
Family legacy planning with charitable focus
Families are becoming more involved in estate planning with a charitable focus. Many parents and grandparents are including younger generations in the decision-making process, creating a family legacy of giving. This approach helps instill the values of generosity and community involvement in children and grandchildren, ensuring the family’s charitable impact continues for generations.
Estate planning offers many ways to incorporate charitable giving, from donor-advised funds to charitable trusts. Exploring these options can help create a lasting impact and align financial goals with personal values.
