Today there are more opportunities for financial creativity in estate planning than ever. In addition to the traditional will, there are many ways to transfer assets to others, depending on what you want to accomplish:

  • Providing for loved ones,
  • Continuing support of your favorite philanthropies,
  • Reducing taxes for you or your heirs,
  • Simplifying the transfer of assets, and/or
  • Communicating your values.

Here is an overview of typical estate planning tools:

Wills: Wills are the cornerstone of most estate plans and establish who is to receive your assets and how much they are to receive. When you have a will, you, not a judge, make the decisions about the distribution of your assets.

When you pass on without a will or other means of transfer, the court takes over and makes decisions for you. If there is no will, no part of your estate will go to your church, your schools, or the charitable causes you want to support.

However, there are easy ways to distribute assets according to your wishes that do not involve wills and probate courts. Some can be set up easily just by signing forms.

Beneficiary Designations: Simply name a person or your favorite charitable cause as a beneficiary of an insurance policy or your retirement account. You need not involve an attorney. Just file the needed paperwork, and the asset transfers when the beneficiary provides proof of your death. There is no waiting for a probate court to act.

Transfers on Death: This is similar to a beneficiary designation. While state laws vary, many states allow you to transfer real property, personal property (such as cars and boats), securities, and bank accounts simply by completing the paperwork. The transfer is effected upon presentation of a legal death certificate.

Both beneficiary designations and transfers on death can be used to support charitable causes. However, it is advisable to check with the officers of the charity about their policies for receiving property, especially real property. (If you are considering giving property to Latin American Youth Center, please contact Pedro Rivera at (202) 319-2251.)

Trusts: There are many types of trusts, including those that are set up to benefit one or more charities. Trusts must be set up by an attorney. Some deliver income to a charity during your life and benefit your survivors when you have passed away. Others produce income for you during your life and transfer to the charity upon your death. There are endless variations, and to choose, you will want to think through your objectives. Your attorney will help you establish the trust that meets those objectives.

Charitable Gift Annuities: These are simple contracts with the charity itself. You make an irrevocable gift, and the charity agrees to make annual payments to you at an established rate throughout your life, no matter how long you live. The rate is based on your age at the time of the gift and will not change. If you elect to cover two lives, the rate will be somewhat lower. Some people build funding for a charitable gift annuity into their wills as a way to provide for surviving family members. Charitable gift annuities offer significant tax advantages. There is the benefit of an immediate tax deduction, and part of the annuity payments will not be subject to taxes.

Each of these tools—and there are others as well!—may be used to create your estate plan and include your favorite charity. It is a good idea to get acquainted with all of them. You should consult your legal and financial advisors, but we can also help you and your attorney with information on gifts to Latin American Youth Center. Please feel free to contact our Chief Development Officer, Pedro J. Rivera, Esq., at (202) 319-2251 or pedro@layc-dc.org.

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