Reducing Income Taxes by Giving to Charity Lawyers
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Why Give Assets to a Charity When I Die?<
If you make a gift to an IRS-approved charity, you can help reduce the amount of taxes your estate may have to pay. Such gifts are exempt from federal estate taxes, and most states will also exempt them. It is important to consider ways to lessen the tax burden on your assets. If you give your assets to charity, you can use life insurance to replace your wealth.
What Are the Advantages of Giving My Assets to a Charity?
There are certain advantages that you should consider when giving away your assets to a charity:
- You get an estate tax charitable deduction, lowering your estate taxes
- You save on the income tax you would have owed on the income that these assets produced
- You can benefit your favorite charity
Keep in mind that the charity must take distribution of your assets by the end of the fifth year after your death. Also, if you would like to still be able to leave sufficient assets to your heirs, you might think about purchasing life insurance with a death benefit equal to the value of your assets.
Using a Charitable Remainder Trust
Another way of making a charitable gift of your assets is to contribute to a charitable remainder trust. Your estate will get an estate tax deduction (equivalent to the charity's interest in the gift), while also avoiding income taxes on those assets. Your beneficiary will then receive payments over a term of years or their life, with the trust balance passing eventually to your named charitable organization. Remember, however, that if you give your assets to a charity or charitable remainder trust during your lifetime (rather than after you die), you will still have to pay income taxes.
Do I Need an Experienced Tax Lawyer?
A lawyer who has experience with income taxes, wills and trusts can help you best determine how to deal with your assets after your death. As noted above, you have many options when gifting your assets to a charitable organization, and an attorney can best help you decide which is right for you.
Consult a Lawyer - Present Your Case Now!
Last Modified: 05-27-2014 02:43 PM PDT
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