Bridgewater Charitable Planning Lawyer

A charitable planning lawyer assisting a client with papers at a desk.

If you are looking to the future and planning how to support your favorite charities, the Van Dyck Law Group’s Bridgewater charitable planning lawyers can assist you. We’ll review your goals and incorporate charitable giving into your estate plan, enabling you to achieve the best possible results.

Often, clients ask us for help in determining the best way to make long-term charitable contributions. They may want to ensure their money goes to the intended recipients with a minimal tax burden.

Alternatively, they may plan to provide for both specific family members and their favorite nonprofit organizations.

Fortunately, there are many charitable planning options that we can use to help with these goals. With the right strategy, giving to meaningful causes can provide a profound sense of fulfillment while also yielding valuable financial benefits.

Strategic charitable contributions can lead to income tax deductions, help reduce capital gains taxes, and even generate lifetime income for you or someone you choose. These gifts may also qualify for estate tax deductions, making them a powerful tool in both tax planning and shaping the legacy you intend to leave.

However, many people are unaware of all the details of charitable tax planning or how to optimize their giving. An experienced charitable planning lawyer can assist you in doing the most good with your contribution.

Don’t hesitate to reach out to us to schedule a consultation and learn more about how we can assist you.

Options to Discuss with a Bridgewater Charitable Planning Attorney

Your charitable planning attorney will ask questions about your objectives so they can recommend the best options for your situation. Here are some common methods of structuring charitable giving that you may discuss:

Charitable Remainder Trust

A charitable remainder trust (CRT) is an irrevocable trust established using cash or other assets as contributions. Upon creation, the donor may claim an immediate income tax deduction based on the value of the gift.

The trust then provides an income stream either for the donor, their spouse, or another designated beneficiary. If the beneficiary is someone other than the donor or spouse, the income is treated as a taxable gift.

This income can be distributed over a fixed number of years or for the beneficiary’s lifetime.

Capital gains taxes on appreciated assets placed into the CRT are postponed until distributions begin, allowing the tax liability to be spread out over time. Once the designated term ends or the income beneficiary passes away, the remaining assets are transferred to a charitable organization of your choice.

For these reasons, CRT may be a good option if you want to give to charity while also ensuring financial support for a loved one.

Charitable remainder trusts come in three types:

Charitable Remainder Annuity Trust (CRAT): This trust provides a fixed annual payment, typically ranging from 5% to 50% of the original value of the assets placed into the trust.
Charitable Remainder Unitrust (CRUT): The CRUT distributes a set percentage of the trust’s value, as determined by its yearly recalculation, offering variable income based on the trust’s performance.
Charitable Pooled Income Fund: This option combines contributions from multiple donors into a single fund, allowing the trust to maximize its impact. It may be helpful if you and other family members all have similar goals and want to combine your efforts.
- For instance, let’s say you have a disabled nephew you want to support, but you know he will likely need more money than you can afford to contribute. If several other relatives also want to help, you could create a pooled income fund to assist your nephew.

Charitable Gift Annuity

A charitable gift annuity shares similarities with a charitable remainder trust because it uses an irrevocable donation to provide income for one or two designated recipients. However, unlike a remainder trust, the donation in a gift annuity is made directly to a qualified 501(c)(3) nonprofit organization.

The charity then calculates the annuity payments using actuarial formulas.

One key distinction is that the nonprofit can use part of the donated funds immediately, rather than waiting until the end of the trust term. Donors may also receive an itemized income tax deduction for the contribution, along with additional tax advantages when the annuity is funded with cash.

Charitable Lead Trust

In this arrangement, an irrevocable trust is established using cash or other assets, and the income generated by the trust is directed to a chosen charity for a specific number of years. When the period ends, any remaining assets in the trust are distributed to non-charitable beneficiaries, such as family members.

Using a charitable lead trust (CLT) can help reduce income taxes, gift taxes, and estate taxes related to the transferred assets. This strategy offers a way to support a charitable organization in the present while ultimately transferring wealth to heirs, often with minimal or no estate or gift tax liability.

Donor-Advised Funds

A donor-advised fund (DAF) allows you to contribute to a public charity that manages the fund, which then distributes grants to the nonprofits you choose. This setup enables you to support charities, religious organizations, endowments, and other qualified recipients on a consistent schedule, weekly, monthly, yearly, or any other schedule you prefer while optimizing income tax benefits.

DAFs pool contributions from many donors into larger accounts or trusts, offering lower administrative costs and greater efficiency compared to establishing a private foundation or individual charitable trust. Additionally, donor-advised funds can receive distributions from charitable lead trusts or property from charitable remainder trusts, giving donors continued influence over how the funds are ultimately allocated.

Private Foundations

A private foundation offers a high level of control over how charitable funds are distributed and the specific causes it supports. Typically established as either a nonprofit corporation or a trust, a private foundation is usually funded by an individual, family, or business entity.

Governance is managed by a board of directors or trustees, who oversee the foundation’s mission and operations.

These foundations may conduct their own charitable programs or issue grants to support other nonprofits and community initiatives. Although they often require significant administrative responsibilities and expenses, private foundations provide a powerful vehicle for achieving long-term philanthropic impact.

They are ideal for those seeking to create a lasting legacy aligned with a distinct charitable vision.

How a Charitable Planning Attorney Helps with Estate Planning

Ideally, charitable and estate planning should be done at the same time to optimize the impact you’d like to have. Charitable planning, when combined with estate planning, offers a range of financial benefits, including immediate tax deductions, deferred capital gains, and the ability to structure income, gifts, or annuities with minimized tax exposure.

If you’re considering charitable giving, you should also keep your long-term estate goals in mind. These strategies can help protect substantial portions of your estate while ensuring your philanthropic intentions are fully realized.

Without a solid estate plan, assets may be vulnerable to gift and inheritance taxes, creditor claims, and probate delays, all of which can erode their value. Using trusts as part of your strategy can help shield assets, reduce taxation, and facilitate a smoother transfer of wealth.

Charitable Planning FAQ

How Do Trusts Fit Into Charitable and Estate Planning?

Irrevocable trusts such as charitable lead trusts and charitable remainder trusts can optimize donations by benefiting both charitable causes and chosen beneficiaries. These tools enable donors to preserve wealth, generate income or inheritance benefits, and leave a meaningful legacy that reflects their values and passions.

Your estate planning lawyer may also advise you on other strategies to reduce taxes for estate beneficiaries, including tax-free lifetime gifts, different types of trusts, generation-skipping transfer tax exemptions, and more.

What Should You Consider for Your Charitable Giving Plan?

Your lawyer may ask you to think about these or similar concerns to help narrow down the best options in your situation:

Timing your gift: Consider whether you want the charity or your beneficiaries to benefit first. Charitable Lead Trusts prioritize giving to the charity now, while Charitable Remainder Trusts focus on supporting the donor or other recipients first.
Planning for retirement income: If generating income during retirement is a goal, a CRT can offer regular payments. However, if you don’t need additional income, a CRT may not be the best fit.
Reducing estate taxes: If lowering your taxable estate is important, a CLT can be an effective tool for transferring wealth while benefiting a charitable cause.
Managing appreciated assets: For those holding assets that have significantly increased in value, a CRT can help defer capital gains taxes when those assets are sold within the trust.

Let Our Bridgewater Charitable Planning Law Firm Help You With Your Charitable Contributions

If you or a loved one is thinking about charitable planning, estate planning, or both, a charitable gift planning lawyer at Van Dyck Law Group can assist you.

We’ll walk you through the options, answer your questions, and help you with the next steps of contributing to philanthropic causes. We’re always available for a consultation, so please don’t hesitate to contact us today and learn more about the possibilities.

You can reach us at (908) 201-0629.