The estate tax, just like income tax, provides for charitable deductions. So to the extent you are inclined to donate assets to charity, you may consider incorporating charitable giving into your estate planning.

Of course the easiest way to give to charity in your estate planning documents would be a cash gift at your death. However, if you are interested in incorporating estate tax savings into your charitable giving you may want to consider a charitable remainder trust—which is an irrevocable that provides annual payments to a noncharitable beneficiary with the remainder going to a charity after the trust period ends—or a charitable lead trust—which makes payments to the charity during the trust term and then goes outright to either the donor or another noncharitable remainder beneficiary.

Estate planning may also provide some income tax savings for the charitable-minded. Leaving qualified retirement accounts to charitable organizations not only allows for a charitable deduction on the estate tax end, but also allows the charity to receive the asset without the income tax bite as well. Retirement accounts are a great asset to leave to charity, while leaving those assets that carry no income tax implications to your individual beneficiaries.

Click here to see articles on the substantive law of estates & trusts in Maryland.

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