How do you feel when you receive a gift you really appreciate? Now how do you feel when you give a gift to someone who really appreciates it? The old adage, “‘tis better to give than to receive,” has been a timeless proverb throughout history for a reason: it’s true. As good as it feels to receive something we appreciate, it feels far better to give something to someone else who can appreciate it even more.

Did you know you can accomplish this by planning your estate? Would you rather give money to your favorite charity or require your beneficiaries to write a large check for your estate taxes (next year, the highest tax rate of any tax in the US) directly to the Department of Treasury?

An effective way to donate to charity as part of your estate plan is via a Charitable Remainder Trust. This is one of the most rewarding ways to make sure that your assets go to the charity of your choice rather than directly to the federal government; thereby, you’ve just allowed Congress to decide what to do with your money. In utilizing this estate planning techniques you can designate assets in trust to donate to charity while still receiving an income from the trust. Once you pass away everything remaining in the trust will go directly to the charity you chose when you first signed your trust.

The tax benefits of donating to charity can be substantial. You can significantly reduce (or in some cases even eliminate) estate, capital gains and income taxes. To find out more about these great tax advantages you should consult an attorney to pick the best option for you and the charitable institution(s) of your choice.

The assets you give to the charity will be removed from your taxable estate. For example, if you give your entire estate to a charity (or the entire amount of your estate over the estate tax exemption, which is unlimited this year but reverts down to $1 million in 2011), your estate will pay no estate taxes!

Additionally, there will be no capital gains tax when the assets are sold by the charity – it’s great for highly appreciated assets. This is another great benefit because if you pass along a rental property to your children worth $500,000 at the time of your death and your beneficiaries sell it for $600,000 they will be paying a capital gains tax [short-term (bought and sold within one year) or long-term (bought and sold over 1 year)] on $100,000, which is the amount of gain from the sale. For simplicity sake, let’s say the long-term capital gains tax applies; they would have to pay $15,000 in taxes as opposed to a charity which would pay nothing in taxes because qualified charities are tax exempt organizations (always a good idea to check with the IRS first to make sure the charitable organization of your choice is recognized as a tax exempt entity). And, if you donate publicly traded securities to a charity, you can get a charitable income tax deduction for their full fair market value – up to 30% of your adjusted gross income.

So you see it pays in many ways to give to charity: you control where the money you donate goes, lower (or even eliminate) potential estate tax liability on your estate, eliminate any potential capital gains tax liability and of course the satisfaction of helping a worthy cause. Ok, so the last one is purely sentimental, but hopefully now you are able see the tremendous benefits charitable contributions can have on your estate, your beneficiaries and the recipient organizations.