When we discuss estate planning, the idea of leaving a legacy often comes to mind. Charitable giving is a powerful way to do just that while also reflecting your passions and values. By incorporating charitable donations into your estate plan, you can continue to support causes that matter to you long after you’re gone. Whether you’re passionate about healthcare, environmental conservation, your favorite public radio station, or squirrel rehabilitation, there are several ways to ensure your contributions make a lasting impact. And there’s a bonus: Charitable contributions can reduce your estate’s taxable value, potentially lowering the estate tax burden on your heirs.
These are several methods to incorporate charitable giving into your estate plan. Each option offers different advantages, depending on your financial situation and the specific goals you have in mind.
- Bequests in Your Will: One of the simplest ways to include charitable giving in your estate plan is by making a bequest in your will. A bequest is a statement in your will designating a specific amount of money, a percentage of your estate, or specific assets to be donated to charity upon your death. This method is straightforward and can be easily adjusted as your circumstances or philanthropic goals change.
- Charitable Trusts: A charitable trust is another powerful tool for providing significant benefits to both the donor and the charity. A charitable remainder trust provides income to you and/or your beneficiaries for a period of time before the remainder of the assets are given to a charity or charities of your choosing. In contrast, a charitable lead trust provides income to your named charity or charities for a period of time before the remainder of the assets are given to you and/or your beneficiaries. Both options have different benefits, so it’s best to consult with your estate planning attorney and financial advisor.
- Naming a Charity as a Beneficiary: Another simple way to include charitable giving in your estate plan is by naming a charity as the beneficiary of your retirement accounts, life insurance policies, or other financial assets. This method is easy to set up and allows you to directly transfer assets to a charity, often with tax advantages for your surviving family members.
- Creating a Charitable Foundation: For those with substantial assets and a desire to make a long-term impact, establishing a charitable foundation can be a meaningful option. A foundation allows you to control the distribution of funds to various charitable causes and can continue to operate for years — even generations — after your death. While creating and managing a foundation requires more effort and resources on the front end, it offers the opportunity to create a lasting legacy aligned with your values.
These are just a few methods, and there are other options and approaches to charitable giving through your estate plan. What is ultimately most effective and cost efficient will depend on your unique goals, needs and situation.
Of course, as with all estate planning, these decisions shouldn’t be made lightly or without the guidance of professionals like your financial advisor, tax professional, and estate planning attorney. Be sure to clearly communicate your wishes to your family as well as the executor or trustee of your estate, too. This will ensure your wishes are understood, respected, and followed.
Incorporating charitable giving into your estate plan is a meaningful way to leave a lasting impact on the causes you care about. Whether through bequests, trusts, or beneficiary designations, your legacy of generosity can live on far beyond your lifetime. Contact Schromen Law, LLC if you have questions about this process!
The material contained herein is for informational purposes only, and is not intended to create or constitute an attorney-client relationship between Schromen Law, LLC and the reader. The views expressed in this article are not a statement of support or endorsement by Schromen Law, LLC. The information contained herein is not offered as legal or medical advice and should not be construed as legal or medical advice.
