If you have created considerable wealth, you might not want to leave it all to your kids. Many well off people come to similar conclusions. While a bit of money can help your children get ahead, making things too comfortable could impact their motivation to succeed themselves.
Giving to charity could therefore be on the cards. Yet, as with any estate planning, there are several ways of doing things. Let’s look at some:
Leave assets in your will
Provided you name the charity correctly, this should be straightforward and requires little work on your behalf. If you wish, you can stipulate what they should use the money for, but it is best to check with the charity first if you wish to do this. Charities may have guidelines preventing them from using that money the way you want. For instance, they may deal with child famine but not in the country you desire to assist.
Create a charitable remainder trust (CRT)
A CRT allows you to give a portion of the money to your children or another person you choose but retain control over the greater amount. For example, you can set up a CRT to make a regular payout to your child, but once they die, what remains goes to the charity. When doing this, you need to consider the likely longevity of the charity you choose.
Leave them your stocks
A charity can get more value from stocks than you can as they do not need to pay capital gains tax when selling them. So, rather than selling the stocks, paying tax and giving the remainder to the charity, you could award them the active stocks.
There can also be tax advantages to giving to charity. Understanding your options will be crucial to achieving your estate planning goals.