Frequently Asked Questions (FAQs)
Q1: What is charitable planning?
A: Charitable planning involves incorporating philanthropic giving into your overall estate, financial, and tax planning. It allows you to support causes you care about while also achieving income tax deductions, estate tax savings, and in some cases, lifetime income benefits. At Boyd & Boyd, P.C., we design customized charitable strategies that align with your personal values and maximize tax advantages.
Q2: What charitable giving strategies are available?
A: Common charitable strategies include:
- Charitable Remainder Trusts (CRTs) — provide lifetime income with a charitable gift upon death.
- Charitable Lead Trusts (CLTs) — provide charitable gifts during life, with the remainder passing to heirs.
- Donor-Advised Funds (DAFs) — allow you to make a tax-deductible donation now and recommend grants to charities over time.
- Private Foundations — offer complete control over charitable distributions but require more administration.
Boyd & Boyd, P.C. helps clients select and implement the best strategy for their goals.
Q3: How can charitable giving reduce estate taxes?
A: Assets given to qualified charities are removed from your taxable estate, reducing or potentially eliminating estate taxes. Structured properly, charitable gifts can also help preserve wealth for your heirs through techniques like CLTs and testamentary charitable gifts.
Q4: Can charitable planning provide lifetime income?
A: Yes. A Charitable Remainder Trust (CRT) can provide you or another beneficiary with an income stream for life or a term of years. After the income period ends, the remainder passes to charity. This strategy offers significant income tax deductions, capital gains tax deferral, and estate tax benefits.
Q5: How can Boyd & Boyd, P.C. assist with charitable planning?
A: We work closely with clients to design personalized charitable plans that maximize tax savings, fulfill philanthropic goals, and integrate seamlessly with their broader estate and wealth transfer plans. Whether through a simple bequest or a sophisticated trust structure, we ensure your giving leaves the lasting legacy you intend.
Should Ask Questions (SAQs)
Q1: What are the advantages of using a Donor-Advised Fund (DAF)?
A: A DAF allows you to make a large, tax-deductible charitable donation now, receive an immediate income tax deduction, and recommend grants to your favorite charities over time. DAFs are simpler and less expensive to maintain than private foundations and offer excellent flexibility for families who want to organize their giving.
Q2: What’s the difference between a Donor-Advised Fund and a Private Foundation?
A: A Donor-Advised Fund is managed by a sponsoring organization and offers simplicity with fewer administrative burdens. A Private Foundation provides more control over investments and grant-making but involves more complex legal compliance, annual tax filings, and excise taxes. Boyd & Boyd, P.C. helps clients decide which vehicle best suits their philanthropic goals and resources.
Q3: Can I donate appreciated assets instead of cash?
A: Yes — and it’s often a smarter tax strategy. Donating appreciated stocks, real estate, or other assets can allow you to avoid capital gains taxes while still receiving a full fair market value charitable deduction. We help clients structure these gifts to maximize both income and estate tax benefits.
Q4: How does charitable planning fit with retirement and IRA accounts?
A: Qualified Charitable Distributions (QCDs) from IRAs allow individuals age 70½ or older to transfer up to $100,000 per year directly to charity without incurring income tax. Also, naming a charity as an IRA beneficiary avoids income taxes on inherited retirement accounts. We help integrate charitable planning into your retirement and estate strategies.
Q5: What if I want my children involved in my charitable legacy?
A: Many families wish to pass down values along with wealth. Structures like Donor-Advised Funds and Private Foundations can be designed to involve children and grandchildren in charitable giving decisions for years to come. We work with clients to create multigenerational charitable legacies that strengthen family bonds.
Charitable planning lets you change the world — and protect your legacy.
Schedule a confidential consultation with Boyd & Boyd, P.C. to build a giving strategy that benefits both your family and the causes you care about most.
Book Your Charitable Planning Consultation or Request Our Free Charitable Giving Guide.
