Planned Giving

Everyone should have an estate plan to ensure that their hard-earned assets reach loved ones and organizations held dear.  Part of planning your estate intelligently may include maximizing the taxes you save by increasing the dollars you give.  Proper estate planning could reduce or potentially eliminate estate taxes through planned giving, unless of course, the government falls into the category of organizations you would like to give to.

If your estate is quite large and contains highly appreciated property it may be possible to gift to charity while passing more to your heirs than otherwise would be possible without the charitable gift.

Giving strategies may span the range from simple to very complex.  They may include giving during one’s lifetime, by bequest, or both.  This article will focus on giving after death.

Planned Giving - What is it?

A “planned gift” is a gift that will be distributed at some point in the future.  The easiest way to make a planned gift is by designating the charitable organization as a beneficiary in your Last Will and Testament or in your Trust.  The charitable organization can also be named as a beneficiary of a life insurance policy, annuity contract, and retirement account.

Avoid taxes!

Making a charity the beneficiary of your IRA, 401(k) or other qualified plan allows you to escape income and estate tax levied on these plans on the Federal and State levels.  This means that, in most situations, your donation is worth more to the charity than to your heirs.

Be smart.

Typically it is smart to give the most-taxed asset in your estate to charity and leave the more favorably taxed property to your heirs.  Making a planned gift assures that when you are gone your resources will keep giving to the future of that charity.

Current limits.

The 2010 Estate Tax Exemptions are $1,000,000 in Minnesota and (currently) unlimited Federally.  This means that you can pass $1,000,000 Estate tax free to the person or place of your choosing.

Effective estate planning usually takes time, effort and a good attorney.  Proper planning allows your family to avoid the delay, dissension and needless expense that often occurs when a loved one dies intestate.  Also, I recommend that you talk with your family about what your intentions are and why you made the choices you have made thereby potentially minimizing disputes and/or disappointment after you pass.

Jennifer Knapp

Libera Knapp, P.A.

125 Center Street

Winona, MN 55987

PH: 507/452-3246

Fax: 507/452-3521

Disclaimer Notice:  This article is not intended as legal advice.  You should carefully review your Will or Trust and your beneficiary designations with a professional trained in handling trusts and estates to achieve your goals.