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Four Planned Giving Benefits to Consider While Estate Planning

Most people spend a good deal of time considering how to leave money to family members when they are planning their estate, but have you ever considered planned giving? “Planned giving” is just a term for giving to an organization or cause you support in a thoughtful, organized manner or creating a plan to give in the future.

If there is an organization you respect or have been blessed by, here are four planned giving benefits that may make investing in them worth your while at the end of your life:

1. Planned giving enables you to give more.

Gifts to charities or non-profit organizations are tax deductible. So, by giving taxable assets (like an IRA or 401k) to a charity, you can give a much larger gift than you could give anyone else.  

For example, if you were to give a portion of your 401k or IRA to a family member, they would have to pay income and, potentially, estate taxes on it.  Depending on the specific circumstances, this can be as much as 77% of the total gift in Virginia, and more in other states.  In words, a gift of $100,000.00 could only really be worth $23,000.00 to the recipient. However, if you were to make that same gift to a charity, it would receive and be able to use the entire $100,000.00.  

Giving in this way makes your money go farther, and for a good cause, too.

2. Planned giving enables you to reduce taxes.

Planned giving also has many tax benefits.  You can reduce your current and future income taxes, estate taxes, and capital gains taxes by taking advantage of various methods of planned giving.  

For example, you could create a charitable trust which provides you with an immediate income tax deduction, but still allows you to use the funds.  This is only one method, but it’s a powerful one.

3. Planned giving enables you to give without worry.

Many people think of estate planning as a great thing but aren’t sure how to do it when they also need to provide for themselves or their family. 

This is the great thing about planned giving, it allows you to give in a way that ensures you and your family are provided for. You can set things up in one of two ways to make sure this happens. You can either wait to give the money away until certain needs are met, or you can give it away immediately but retain the use of those funds until they are no longer needed. 

In this way, you can make a difference while at the same time protecting and providing your loved ones.  

4. Planned giving enables you to make an impact.

Planned giving allows you to make an impact, because you can give more and give it at one time. To offer a personal example, I am a huge advocate of NW Works, Inc.  

If you have experienced the gift of NW Works, Inc. for yourself or a loved one, you know how wonderful it is.  Their mission is to empower adults with disabilities to build the skills they need for employment. They have come alongside thousands of clients over the past 50 years, providing them with a deeper sense of purpose and giving them opportunities to be involved in our community. So when you support NW Works, Inc., you directly affect those who need help finding meaningful employment. 

Planned giving allows you to make a specific impact in the world when you use it to support causes like these.

Are the Benefits of Planned Giving Right for You? 

As you evaluate your goals for the end of your life, consider whether supporting a charity or cause is important to you. If it is, then these planned giving benefits might determine the course of how you set up your legal documents. 

Joshua E. Hummer, Esq. is a licensed attorney in both Virginia and West Virginia. He is a graduate of the University of Virginia and has been practicing law for over 15 years. Josh specializes in estate planning, elder law, and elder planning. He is co-author of the upcoming book, “Fearless: Facing the Future Confidently with Relational Estate Planning®” and is passionate about helping others form end-of-life plans that benefit their loved ones and leave a legacy behind. Outside of work, Josh loves spending time with his lovely wife, Jill, and their four vibrant children.

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