People in the Charlotte area who are planning what will happen with their wealth after they die may want to include charitable giving in that plan.
Many North Carolina residents have causes and organizations which are dear to them. Speaking more generally, they may also think it right to give some or even most of their wealth away to charity.
Most charitable gifts and bequests are tax exempt provided the gift goes to a qualified organization. Donations to charity can also reduce a person’s income tax liability.
However, these are not the only financial advantages a well-crafted charitable giving plan can offer. For example, a person with an IRA that is not a Roth IRA must make withdrawals after a certain age. Those withdrawals are taxable.
If a person with an IRA takes advantage of a qualified charitable distribution, however, then the money donated to the qualified charity is not taxed. The standard deduction also remains fully available to the person after a distribution.
In practice this means that the taxpayer gets the advantage of a tax-incentivized charitable donation and the standard deduction, which is a net larger write-off.
A Charitable Remainder Trust may be a good option for North Carolina families
Another useful planning tool for charitable giving is a Charitable Remainder Trust.
To give an overview of these types of trusts, the person who creates the trust must make it irrevocable, meaning he or she will have no power to end the trust and take back the property in it.
The trust document will specify that income will be paid to certain beneficiaries, loved ones for example, for a certain number of years. At the designated time, what is left in the trust will go to charity.
This setup has multiple tax advantages, and it also allows a Charlotte resident both to provide for loved ones and to donate to charity.
It is important for those who wish to create an estate plan which includes charitable giving to understand their options and have experienced professional assistance with carrying them out.