Estate planning is one of the wisest undertakings you can ever do with the things you own. Forbes cites real-life consequences to not having an estate plan in place. Planning for your estate and setting all your wishes in clear and organized order through the creation of a will is a matter best done early in life. It is when your mental faculties are in prime condition. This ensures that the time and efforts you’ve invested in creating and providing stability for you and your loved ones remain intact and profitable long after you’re gone.
In making a will, it is important to include charity in your appointed bequests. Doing this puts you, your estate, and your beneficiaries at an advantage.
Longer Life And Better Health
The Journal of Economic Psychology published a 2015 research on charitable giving. It reports that charitable giving improves the giver’s physical and emotional wellbeing. When you include charity in your will, you personally benefit. You live longer and you fare better. You get satisfaction from knowing that your efforts help improve the lives of not just your loved ones and yourself, but of so many other people as well. It validates all the hard work you’ve been putting in. With a more positive outlook gained, it’s hard to think what else can beat the immediate profit of improved health and life expectancy.
Tax credits for donations given to charities different depending on where you live. Donors automatically get tax breaks for charitable bequests extended to charities. For example, bequests willed to registered Canadian charities can grant tax credits of up to 100% of the donor’s income. The credit may apply not only in the year of his death but the preceding year as well. CTF provides a published report of Canada’s Standing Committee on Finance (and more) for further insight.
A wise investor takes advantage of provisions like this. Investing a part of your estate into a charity can reduce inheritance taxes down to a significant rate. Taxable amounts on the estate exclude any values set aside for charitable giving. That immediately cuts down estate taxes due. Additionally, charitable giving entitles you to tax credits. This will further reduce the amount of tax payable on the estate. With taxes reduced, you get to preserve more of your estate. Strategize so you can reach the best tax rate per amount of donation. You may best achieve this by consulting with an estate planner.
The Need for Precision
Avoid legal problems by ensuring that your charitable bequests are precisely named. Identify using business features that remain the same throughout their existence. You may use business ID numbers and company ID numbers for better identification. Let details remain current. Updated name changes may invalidate your donation.
Consider naming a Charity in your Estate planning. It will not only benefit the charity and build a stronger community, you will also benefit.