Could charitable planning help lower tax burdens?

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On Behalf of: Hatley Law Group, APC | POSTED ON: November 8, 2021

When writing a will, a testator may intend to provide for loved ones by leaving them substantial assets. Friends, relatives and business associates commonly receive assets when a will enters probate in California. Other entities like charities could receive funds from an estate. Several reasons motivate people to leave money and property to charitable causes. Besides doing a good deed by supporting a charity, an estate planner might relieve family members of tax and other burdens.

Leaving estate items to charity

Someone may have considerable assets, including a dilapidated second home. The testator may pass away before selling the home, but surviving relatives might not have the funds to repair or maintain the property. Immediately selling the house could open up significant short-term capital gains taxes. Leaving the “ugly house” to a charity might be better for everyone as the surviving relatives would receive other, less taxation-heavy assets.

Charitable trust

For some Californians, charitable estate planning involves setting up a trust. The planner might prefer a trust because it could help a charity and surviving relatives. A charitable lead trust allows someone to put money in a trust, disburse payments to a charity for several years and then turn the remaining money over to beneficiaries.

Other considerations for charitable planning

Are survivors capable of caring for specific assets? Family members might not realize how valuable artwork and collectibles are. Some beneficiaries prefer to “unload” such belongings to the first offer. Maybe these things should go to a charitable organization that better values the items. Putting such things in a charitable remainder trust could be an option.

Combining estate planning with charitable giving may provide the donor with immediate tax benefits. Not only can beneficiaries be protected from tax burdens, but the law also allows an estate planner to take advantage of deductions.

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12636 High Bluff Dr., Ste. 400
San Diego, CA 92130-2071

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