Estate planning isn’t just about passing on assets, it can also be about leaving a legacy that supports causes you care about. Charitable giving through your estate plan can be a powerful way to make a lasting impact.
Many people choose to leave a charitable gift to support their community, honor a loved one, or to ensure causes they believe in continue long after they are gone. For others, it is about teaching their children the importance of generosity or making sure their values are passed down to future generations. No matter the reason, charitable giving through your estate plan is an opportunity to make a meaningful difference.
Step One: Choose the Right Organization
First, consider whether you want your gift to qualify for tax benefits. If you want this gift to be considered a tax-deductible contribution, then the organization you select must be a qualified, tax-exempt organization recognized by the IRS under code section 170(c). The list of what is considered a qualified tax-exempt organization generally includes 501(c)(3) organizations such as charitable foundations, nonprofits, and community organizations, religious organizations, educational institutions, and certain other nonprofits such as veterans’ groups, or government entities such as your city’s park system.
Most well-known charities fit into these groups but don’t hesitate to think local. Consider the local organizations you value, such as hospitals, churches, or food banks. However, be mindful that donations to political groups, social clubs, or foreign nonprofits usually do not count as charitable contributions. The IRS offers a free online “Tax Exempt Organization Search” tool to confirm if a group is qualified at https://www.irs.gov/charities-non-profits/search-for-tax-exempt-organizations.
Step Two: Decide How to Make Your Legacy Gift
Once you have decided which organization(s) you would like to make a charitable bequest to, next you can focus on how you would like to donate. Whether it be through your Last Will and Testament or a Trust, there are several ways to give, here are few examples:
- Naming a charity as a beneficiary on your IRA
- Utilizing your specific bequest section in your Last Will and Testament to carve out a portion of your estate to the charitable organizations of your choice.
- Naming a charitable organization as beneficiary to your trust
- Creating a Charitable Remainder Trust which can provide benefits to you or your family during your lifetime and then pass the remainder to a charity.
Many of these options allow you to change or revise these bequests as time goes on. Whether you want to change the charitable organization or amount you want to give, there is flexibility in your gift.
Balancing Family and Chairty
Many people worry that giving to charity through their estate plan means taking away resources from their family. However, this does not have to be the case. You can structure your gift to reflect your values while still providing for your loved ones. For example, instead of giving a fixed dollar amount, some individuals choose to give a small percentage of their estate to charity. That way, their family still receives the bulk of their estate, while the charity benefits from meaningful support.
Sample language might look like this:
“Two percent (2%) to the Kansas City Pet Project, a nonprofit corporation located in Kansas City, Missouri, Tax ID 45 – 3067615, if such organization is then in existence.”
Taking the Next Step
If charitable giving is something you would like to include in your estate plan, then it is important to ensure the language in your will, trust, or beneficiary designation form is clear and legally enforceable. An experienced estate planning attorney can help you balance your desire to support family along with your wish to give back to your community. Even a modest gift can leave a lasting legacy.
