Houston Charitable Planning

According to a recent estimate, six out of ten households in the United States donate money to charity at some point during the year. Most recently, Americans donated over $471 billion per year to various charities. As a general rule, Americans are not only generous during their lifetimes but also after death by arranging for charitable gifts through their last will and testament. While leaving money or assets to your favorite charity is certainly a noble thing to do, if done correctly, it can also have favorable tax implications. At McCulloch & Miller, PLLC, our Houston estate planning lawyers work closely with our clients to effectuate their charitable planning goals. We recognize that, while your decision stems from kindness and compassion, you should also be able to benefit from the incentives the federal government provides to encourage generosity.

It’s not a trick question. This is actually a position that many families find themselves in when sitting down with a Houston estate planning lawyer. However, to benefit from the tax incentives that come along with charitable giving, it is important that the gift is properly structured. At McCulloch & Miller, our charitable giving lawyers have decades of experience helping families implement generous and tax-reducing estate planning strategies. Properly implemented strategies can maximize the value of your gift while ensuring the best tax consequences for you, your family, or beneficiaries. Conversely, gifting that is not thought through or well planned can potentially cost you excess taxes or negatively impact your eligibility for public benefits.

Those who want to make gifts to their favorite charity have several options. For example, you can either make a gift during your lifetime or upon your death. Regardless of which approach you choose, there are many choices available to you.

One popular option when it comes to charitable giving is to make an outright gift, either of cash or other assets such as real estate. The benefits of outright gifting include simplicity and immediate gratification. Making an outright gift also provides tax incentives in that the gifted amount is not subject to tax, provided the annual gift is less than $15,000 for 2021 or $16,000 for 2022 and beyond. These limits are per recipient. There is also a $12.06 million lifetime exclusion.

A charitable remainder trust or a charitable gift annuity can give you an immediate income tax deduction. It can provide you with an immediate tax deduction for your entire gift while also providing you with a stream of income or an annuity throughout the rest of your life. This is especially beneficial for one-time gifts of highly appreciated assets.

A charitable lead trust creates an income stream that goes to a named charity for a certain period of time. Once the time comes, the remainder of the trust will go to your children or other named beneficiaries. Your children will not face any estate or gift tax consequences. Charitable lead trusts work well for those who own significantly appreciated assets, as this type of trust can reduce the capital gains taxes.

These represent just a few of the most common charitable planning options. Anyone considering making gift—either during their life or upon their death—should consult with an experienced Houston estate planning attorney to ensure their wishes are properly carried out.

If you would like to add to your legacy by leaving charitable gifts, contact McCulloch & Miller, PLLC, to schedule a consultation with one of our Houston estate planning lawyers. At McCulloch & Miller, PLLC, we will sit down with you to understand your goals, allowing as much time as needed. We are here to answer your questions and provide effective guidance so you can rest assured that your chosen path benefits your chosen charity, as well as your family. To learn more about the estate planning services we provide and to schedule a consultation, give McCulloch & Miller, PLLC, a call at (713) 333-8900. You can also reach us through our online contact form.