Wealthy Michigan residents frequently donate to philanthropic causes during their lifetimes. While many do so for tax reduction purposes, others do so because they believe in the organization. People who have large estates can continue to donate after their deaths. Here is how you can keep giving to your favorite organizations.
Establish a planned giving strategy
Although you can’t donate money or other assets to everyone, developing a giving strategy as part of your estate planning tasks will allow your favorite charities to continue receiving money. Understanding your options is the first step in planned giving. Consider various planned giving strategies, such as designating a charity with a bequest in your will or naming one as a beneficiary for a life insurance or investment account. Charitable trusts or gift annuities are other options. Decide on your goals for giving before getting caught up in the various forms.
Be realistic about your choices
Most people still want to leave a sizable amount to their heirs, so think carefully about how much you want them to receive before deciding what is appropriate for charity. If you have a broad range of assets, analyze which ones will be most appropriate for giving. Look at your current and future financial needs to determine what percentage of your income you are willing to donate and whether you will have enough money to live on until the end of your life. Ask yourself which assets to donate will make the most sense from a tax standpoint.
Work with knowledgeable professionals
In addition to working out the legalities of leaving a legacy to charity, working with financial professionals to set up trusts and other instruments can make the process easier and possibly provide you with the most significant tax breaks during your lifetime and for estate tax purposes. Having another set of professional eyes to review your wishes will also ensure you can achieve your charitable donations.
When you have carefully considered the various aspects of charitable giving and your current financial situation, your path for donating assets should become clear. Remember that as the grantor, you always decide how your money should be distributed and spent.