By Attorney Scott Lynett
When most people think about estate planning, they think about wills, inheritances, and dividing up assets after they’re gone. But for many people, especially here in our small towns and rural communities, there’s another powerful reason to plan ahead: giving back to the local charities, churches, libraries, and community groups that hold our towns together.
In rural areas, local nonprofits often rely heavily on neighbors’ generosity to keep their doors open. Volunteer fire companies, scholarship funds, animal shelters, youth programs, and local food pantries depend on gifts from people who understand the unique needs of their community. As a business owner myself, I know firsthand how deeply our local communities depend on our commitment and investment. I also know how vital it is to use the right tools and strategies to make your giving as effective as possible, for both your legacy and your loved ones.
The good news? With thoughtful planning, you can make a real impact and benefit from meaningful tax advantages along the way.
Why Charitable Gifting Is a Win-Win
Charitable contributions can reduce your taxable estate, lower income taxes, and even help you manage required minimum distributions (RMDs) from retirement accounts. The right strategy can help you:
- Support causes you care about
- Reduce capital gains or income taxes
- Provide for your family
- Leave a lasting legacy for your community
Below are some proven tools and strategies to make your charitable giving go further, especially for those who want to give back locally.
1. Make Qualified Charitable Distributions (QCDs) from Your IRA
If you’re 70½ or older, you can donate up to $108,000 per year directly from your IRA to a qualified charity through a Qualified Charitable Distribution (QCD). This satisfies all or part of your Required Minimum Distribution (RMD) and excludes that amount from your taxable income, potentially lowering your tax bill and Medicare premiums. You don’t pay taxes, and neither does your favorite charity, a real win-win.
For many retirees, using IRA funds for charitable giving is one of the most tax-efficient ways to give back.
2. Use a Donor-Advised Fund (DAF)
A Donor-Advised Fund lets you make a charitable contribution now, receive an immediate income tax deduction, and recommend grants to your favorite charities over time. This is especially helpful if you’d like to manage large charitable gifts during high-income years or spread gifts out over time.
DAFs are flexible, easy to set up, and work well for families who want to teach the next generation about giving back.
3. Charitable Trusts: CLATs & CRATs
If you want to blend giving with tax savings and income, charitable trusts are powerful tools.
- A Charitable Lead Annuity Trust (CLAT) pays income to a charity for a term of years, then passes the remaining assets to your heirs, potentially reducing gift and estate taxes on appreciating assets.
- A Charitable Remainder Annuity Trust (CRAT) does the reverse: you or another beneficiary receive a fixed income stream for life or a term of years, and when the trust ends, the remainder goes to charity. A CRAT can be an excellent way to convert highly appreciated assets into income without immediate capital gains tax.
Both trusts can help you support your favorite causes while providing for your family and managing tax exposure.
4. Simple Options: Bequests and Beneficiary Designations
Don’t overlook simple but effective ways to make a difference. Leaving a bequest in your will or naming a charity as a beneficiary on a life insurance policy, bank account, or retirement plan can be one of the easiest ways to support local causes. And these gifts typically reduce the taxable value of your estate.
Strengthen Your Local Community for Generations
The beauty of charitable planning is that it’s about more than dollars and cents. It’s about the local library that shaped you as a kid, the church that supported your family, the rescue squad that saved a neighbor’s life, or the local students who’ll benefit from a scholarship you help fund.
In rural communities, every gift counts, and smart planning ensures your generosity goes where it’s needed most, not to unnecessary taxes.
Ready to Make an Impact?
Your legacy is more than what you leave behind, it’s the difference you make today and the communities you help strengthen for tomorrow. If you’d like to explore charitable gifting strategies that align with your values, minimize taxes, and maximize your impact, contact my office to discuss your options.
Call us today at (570) 468-7603. I look forward to helping you build a plan that gives back to the people and places that matter most to you.
