Charitable Giving

People may wish to give to a charity while alive or when they are gone. It can be a school, church, or particular cause that they are interested in. The office of the Minnesota state Atty. Gen. has a charity search function on its website.  GuideStar is another useful source of data on nonprofit organizations.

The simplest and most straightforward is to make an OUTRIGHT GIFT to the charity, either while living or postmortem. The advantages to making a gift while living are that it is at least partially deductible for income taxes, and you get to see the benefit of your gift. Leaving a gift to charities in your will is 100% estate tax deductible.

Making a gift of LIFE INSURANCE or designating the charity as the beneficiary of life insurance adds substantial leverage to your gift. This can enable a donor to make a large future gift for the cost of current premiums. Use of an IRREVOCABLE TRUST to own life insurance (ILIT) may be appropriate in larger estates where estate taxes are a substantial issue.  They are frequently used to replace the wealth given to a charity in order to benefit heirs of the estate without estate taxation. This is called a WEALTH REPLACEMENT TRUST.

There are two types of donor trusts to benefit charities that are sanctioned by the IRS: CHARITABLE LEAD TRUSTS and CHARITABLE REMAINDER TRUSTS.

.