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Charitable Legacy

Leaving a Charitable Legacy in Florida

Many of our Florida estate planning and elder law clients often desire to leave their estates to a charity, church, school, or other charitable organization in order to leave a legacy behind to help make the world a better place. There are many ways to create a legacy, and estate planning is a great tool that can be used to benefit both the charity and loved ones, but one must be careful that they do not disqualify themselves or their family from Medicaid benefits by making gifts that can be counted against them. If you are over 60, you should talk with your Florida elder law attorney about how to properly make gifts that will not cause a disqualification from Medicaid benefits.

What are the Benefits of Leaving a Charitable Legacy in Florida?

Charitable giving in Florida can allow our clients to meet a number of their financial needs while also leaving enough money left over to provide inheritances for their heirs. Charitable giving can also help to lower a person’s taxable estate, and thus to avoid costly capital taxes on certain assets. Leaving a charitable legacy can also build goodwill for the estate’s heirs.

How can Estate Planning Help You Leave a Legacy?

The key to helping our clients leave a charitable legacy is to be flexible and to review the many estate planning tools at our disposal. Not every charitable gift should be treated the same, and the manner the gift is given is often as important as the gift itself.

Lifetime Gifts

We often recommend to clients that they go ahead and simply give money during their lifetimes when the amount is small enough to avoid gift and estate taxes. The gift and estate tax emptions are currently so high that most people need not worry about being taxed. In 2016, a person may give up to $14,000 a year and also have a separate $5.45 million lifetime exemption before they are taxed. Married couples can give up to $10.9 million during their lifetime before they face gift and estate taxes. CAUTION: Even though you may give up to $14,000 a year, this gift can still cause problems in the even that Medicaid benefits are needed within 60 months. There is a solution you to this problem using a Florida Asset Protection Trust.

This is why we recommend many of our clients to give during their lifetime if they are ready to leave their legacies now. However, many people have quite large estates, and these exemptions are needed in order to preserve the estate for family members and other heirs. Even if you have a large estate that needs to be preserved, a person may still give $14,000 as a gift to a person, charity, or other organization without fear of eating into the lifetime exemptions. There is no limit to how many of these small gifts a person may give. Further, these gifts are a great way to lower a person’s taxable estate, which can also be a great money saving tool.

Charitable Remainder Trust

Another great way to leave money to a charity is through a charitable remainder trust. A charitable remainder trust allows a person to donate assets to the charity of their choice after they pass away. In the meantime, the assets are held in a trust and invested by the trustee. A beneficiary can be designated to receive any income that the trust assets produce, and when the trust creator passes away the principal of the trust is given to the charity. This is a great way to leave a legacy after ones dies and also to provide for loved ones.

Charitable Lead Trust

A charitable lead trust is similar to the charitable remainder trust, but the trust assets are transferred to the settlor’s beneficiary after a certain period, while the income generated from the trust is given to the charity. In many ways the positions of the charity and the beneficiary are reversed from their positions in the remainder trust. Many prefer this type of charitable trust because it allows the charity to benefit immediately, and the beneficiaries to receive a large inheritance without worrying about estate taxes. This approach may also allow the beneficiaries of the trust to become more involved themselves with the charity.

Trusts, Wills, and Retirement Plans

Another easy way to leave a legacy in Florida is to name a charity as the beneficiary of your trust, will, and retirement plans. One of the best aspects of charitable giving is the piece of mind gained from knowing that you are leaving a rich legacy behind. This is a great option for our retired clients in Florida that need their current estates for daily living purposes, but wish to leave some or all of their assets to charity.

Life Estates

Another great way to give property is through a life estate deed. A life estate deed allows a person to give a piece of property, such as house, to a charity and still retain the rights to live and use the property during their lifetime. This is a good way to let a charity or organization receive the home without going through the probate process. A life estate deed can also be a good way to receive Medicaid benefits through a Florida lady bird deed.

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