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Philanthropy and Charitable Planning Lawyer in Wisconsin

If you have a large estate and want to find a way to benefit it while doing something good, then charitable giving in Wisconsin may be the perfect option. Charitable giving as part of your estate planning is a great way to satisfy the desire to give to a cause you care about and take advantage of tax perks. But knowing how to do it smartly is another thing altogether.

At Heritage Law Office, our estate planning attorney based in Wisconsin can review your estate and advise you on the right plan that aligns with your needs and wishes. If charity giving offers benefits, we will discuss it with you. Contact us today at 414-253-8500 to schedule a free consultation and to learn more about philanthropic options and your estate plan.

What Is Charitable Giving?

Charitable giving involves a donation of cash or property to a non-profit organization. Property donations include things like: 

  • Vehicles
  • Real estate
  • Stocks
  • Works of art
  • Jewelry
  • Household appliances or other items

A charitable gift isn't an investment––the donor doesn't receive anything in return for it from the donee. It's an altruistic gift made to support the objectives of the organization. 

You can benefit, though, from a charitable gift. Charitable giving often attracts a range of tax exemptions. For these to apply, a charity typically must be a qualified organization. 

What is a qualified organization?

The IRS defines qualifying organizations as “nonprofit groups that are religious, charitable, educational, scientific, or literary in purpose, or that work to prevent cruelty to children or animals.”

Qualifying organizations include:

  • Community chests, corporations, trusts, funds, or foundations created for the above purposes
  • War veterans' organizations
  • Domestic fraternal societies, orders, and associations, if created for the above purposes
  • Some nonprofit cemetery companies or corporations
  • Religious organizations, like churches, synagogues, temples, and mosques
  • Nonprofit schools
  • Nonprofit hospitals
  • Nonprofit organizations like Salvation Army, Red Cross, Goodwill, and United Way
  • Federal, state, and local governments, if the funds are for public purposes (like public parks and recreation facilities)

The definition of a qualified organization does not include gifts to individuals or political donations. 

Charitable Giving and Estate Planning

Charitable giving often comes up in the context of estate planning, when someone wishes to donate part or all of their estate to a charitable organization. Regardless of whether it's a small or significant donation, there is a range of ways to incorporate charitable giving in your estate planning. 

Charity Giving in Wisconsin as Part of a Comprehensive Estate Plan

One of the simplest ways to provide a charitable donation as part of your estate planning is to include a cash donation to a specific charity in your will. 

However, there are several other ways to do it. Choosing the right one for your circumstances can minimize the tax liability of your gift, maximizing its impact. 

Charitable Lead Trust

A charitable lead trust is an irrevocable trust that exists for a set period. It can be created during the life of a donor or upon their death. 

A donor transfers their assets to the trust. The charity is named as a beneficiary and receives payments during the life of the trust. At the end of the trust, its balance is transferred to other beneficiaries, such as family members. 

The potential benefits of this structure include exemptions and reductions on income, estate, and gift taxes. 

Charitable Remainder Trust

A charitable remainder trust is the inverse of a charitable lead trust. Family members (and the donor, during their lifetime) can be named as beneficiaries, receiving payments for the term of the trust. When the trust ends, the remaining assets are transferred to a charitable organization as the designated beneficiary. 

This trust enables a donor to earn income from their assets before leaving them to charity. 

Retirement Plans

You can name a charity as a designated beneficiary of your individual retirement account (IRA, 401(k)s, or 403(b)s). In certain situations, this may be classed as a charitable tax deduction to help offset income and/or estate taxes. 

Life Insurance

Like IRAs, many life insurance policies allow you to name one or several charities as the beneficiary of your life insurance so they receive funds under the policy. 

Charitable Gift Rider

Some life insurance policies allow policyholders to add a charitable gift rider that pays a percentage of the policy's value to a qualified charity. Insurers generally have rules around charitable gift riders, including capping the distributed amount.  

Gift Through Community or Private Family Foundation

A community foundation receives, manages, and distributes charitable gifts from a range of donors in a specific local area. A private family foundation is funded by family assets, and the donors have control over how much is given to a charity and how the gifts can be used.

Gift Appreciated Stock

Giving your appreciated stock (i.e., a stock that has increased in value) to a charity rather than selling it may reduce your capital gains tax liability. 

When Should You Consider Giving Charity for Estate Planning Purposes in Wisconsin?

If you're passionate about supporting an important cause, a range of ways exist to incorporate charitable giving into your estate planning. 

Regardless of the size of your gift, if you are considering donating some of your estate to a charity, it's best to speak to an estate planning lawyer as soon as possible. They can review your situation and advise you on how to structure your gift to maximize its impact, as well as assist you to make the necessary arrangements.

Contact an Estate Planning Lawyer in Wisconsin Today 

If you are interested in philanthropic or charitable giving, you can take advantage of tax breaks if you manage it through your estate plan. Our charitable planning attorney in Wisconsin will help you decide which type of charitable trust or foundation is best for you. Contact us today by filling out the online form or calling us at 414-253-8500 to schedule a free consultation.

Frequently Asked Questions (FAQs)

1. What is a Charitable Lead Trust?

A Charitable Lead Trust is an irrevocable trust that exists for a set period. The donor transfers their assets to the trust, and a charity is named as a beneficiary, receiving payments during the life of the trust. When the trust period ends, its remaining balance is transferred to other beneficiaries like family members. This structure can offer exemptions and reductions on income, estate, and gift taxes.

2. How does a Charitable Remainder Trust work?

A Charitable Remainder Trust is essentially the opposite of a Charitable Lead Trust. Family members (and the donor, during their lifetime) can be named as beneficiaries, receiving payments for the term of the trust. When the trust ends, the remaining assets are transferred to a charitable organization as the designated beneficiary. This type of trust allows a donor to earn income from their assets before leaving them to charity.

3. Can a charity be named as a beneficiary of a retirement plan or life insurance?

Yes, a charity can be named as a designated beneficiary of individual retirement accounts like IRA, 401(k)s, or 403(b)s, and life insurance policies. In certain situations, this could be classified as a charitable tax deduction to help offset income and/or estate taxes.

4. What is a Charitable Gift Rider?

A Charitable Gift Rider is an addition to some life insurance policies that allow policyholders to pay a percentage of the policy's value to a qualified charity. The insurers generally have rules around charitable gift riders, which can include capping the distributed amount.

5. What is the advantage of gifting appreciated stock?

Gifting your appreciated stock (i.e., a stock that has increased in value) to a charity rather than selling it can reduce your capital gains tax liability. This means you could potentially save on taxes while also supporting a cause you care about.

Contact Us Today

For a comprehensive plan that will meet your needs or the needs of a loved one, contact us today. Located in Downtown Milwaukee, we serve Milwaukee County, surrounding communities, and to clients across Wisconsin, Minnesota, Illinois, and California.

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