The importance of including a charity in your estate planning
WILLS AND ESTATE PLANNING:
Estate planning is one of the wisest ventures you can do with the things you own. Forbes cites the real-life consequences of not having an estate plan. Planning your estate and setting all of your wishes in a clear and organized order through the creation of a will is a matter best done at an early age. It is when your mental faculties are in optimal condition. This ensures that the time and efforts you’ve invested in creating and providing stability for yourself and your loved ones remain intact and profitable long after you’re gone.
When making a will, it is important to include charity in your designated bequests. Doing this puts you, your estate, and your beneficiaries at an advantage.
Longer life and better health
The Journal of Economic Psychology published a 2015 investigation into charitable giving. Reports that charitable giving improves the physical and emotional well-being of the donor. When you include charity in your will, you benefit personally. You live longer and you do better. You derive satisfaction from knowing that your efforts help improve the lives of not only your loved ones and yourself, but many others as well. Validate all the hard work you’ve been doing. With a more positive outlook gained, it’s hard to think what else can beat the immediate benefit of better health and life expectancy.
Tax credits
Tax credits for donations given to different charities based on where you live. Donors automatically get tax breaks for charitable bequests made to charities. For example, bequests made to registered Canadian charities can provide tax credits of up to 100% of the donor’s income. The credit can be applied not only in the year of her death but also in the previous year. CTF provides a published report from Canada’s Standing Committee on Finance (and more) for more information.
A smart investor takes advantage of provisions like this. Investing a portion of your estate in a charity can reduce inheritance taxes at a significant rate. Amounts subject to estate tax exclude any value set aside for charitable donations. That immediately reduces the estate taxes owed. Additionally, charitable donations entitle you to tax credits. This will further reduce the amount of taxes payable on the estate. With reduced taxes, you can preserve more of your wealth. Create a strategy so you can achieve the best tax rate per donation amount. The best way to accomplish this is to consult with an estate planner.
The need for precision
Avoid legal issues by making sure your charitable bequests are accurately named. Identify the use of business features that remain the same throughout their existence. You can use business identification numbers and company identification numbers for better identification. Let the details stay up to date. Updated name changes may invalidate your donation.
Consider naming a charity in your estate planning. You will not only benefit the charity and build a stronger community, but you will benefit as well.