One of the most noble ways to manage your money is by participating in charitable giving. There are quite a few benefits associated with charitable giving, including helping others in need, tax deductions, setting a good example for future generations and more. Here are a few ways to use charitable giving in estate planning in Massachusetts.
Tax Deductions
There are two primary types of tax deductions: charitable income tax deductions and estate deductions. The maximum charitable income tax deduction in Massachusetts are 20%, 30%, and 50% of an adjusted gross income. The percentages reflect what type of donation is made and to which organization it is made out to. Certain organizations have higher maximum percentages based on what the state deems appropriate.
Estate taxes can be tricky and we advise you to seek further guidance. There is a 1 million dollar limit to what a deceased person can pass on to their family or friends, tax-free. This is the Massachusetts threshold. The federal limit is 11.2 million dollars for an individual and 22.4 million dollars for a married couple. Using charitable giving and even gifting strategies can reduce the value of your estate to avoid estate taxes.
Options for Charitable Giving in Estate Planning In Massachusetts
There are a few types of charitable gifting strategies. There are charitable remainder trusts, charitable lead trusts, creating a private foundation or having a donor advised fund. Each option has its benefits. Charitable remainder trusts gift individuals annually, then pay the remainder of the trust to a charity of your choosing. Charitable lead trusts are the opposite and gift the charities annually, while paying the remainder to the beneficiaries. Creating a non-profit, run by its own trustees, is what a private foundation is considered to be. Finally, donor advised funds allow the donor to decide who the money is going to, typically in the form of grants from that fund.
Know What You Can, Seek Guidance For The Rest
As you can now see, you have plenty of options. Do not let the dated Massachusetts tax regulations stop you from giving to others. Educating yourself can certainly help, but seeking guidance will ensure that you make smart estate planning decisions. Talk to an experienced professional at Martino Law Group. We can help you decide how to use charitable giving in estate planning in Massachusetts.