Some North Carolina residents who are creating an estate plan may want to include a charitable donation. This can be a way for people to support a cause that is important to them during their lifetime. It can also be a way to reduce estate tax. There are several ways in which to arrange this charitable donation.
A person can simply include the charitable donation in the will. The person may want to work with an attorney to ensure that the correct language is used. Another option is making a charity the beneficiary on a retirement account. Charities do not have to pay income or estate tax, so whatever the value of the retirement account, they will be able to receive it tax free.
A charitable trust is another way to make a donation. With a split-interest trust, a person can continue holding the asset while alive. The trust remains in the charity’s name, but the creator of the trust can get a tax deduction whenever money is moved into the trust. There are a number of different options associated with charitable trusts, so a person who is creating an estate plan may want to talk to an experienced attorney about the alternatives available.
An attorney may also be able to assist a person with other elements of estate planning. Even if a person does not plan to donate to charity, trusts can be useful tools. Some types of trusts can protect assets against creditors. Others may allow a person to control how distributions are made to beneficiaries. For example, a person might be concerned that a beneficiary will not be responsible with an inheritance, so the trust document can provide that distributions will only be made upon the achievement of certain specified milestones.