How Make Charitable Giving Part of  Your Estate Planning 

Jenny Handwerk |

How Make Charitable Giving Part of  Your Estate Planning 

Businesses and individuals can save money on taxes while supporting causes that align with their values by contributing to charities.
There are many deserving causes, as well as numerous individuals and initiatives, that require assistance to improve the world. Consider including them in your estate plan and using the money you leave behind to support them through a charitable donation.

This can be a beautiful way to support a cause that is important to you personally, have a positive impact, and give back to the world. The fact that it feels so good is another reason why many choose to include a charitable donation in their estate plan.

You will be able to designate who will inherit your assets and who will have the authority to make financial and more important medical decisions on your behalf by your estate planning. Because navigating beneficiary designation documents, a will, a health-care provider, a power of attorney, and occasionally a trust can be difficult, the process is frequently a frenzy.

Regrettably, charitable contributions are frequently neglected. Many people need clarification about how to integrate their charity aspirations or disregard the best to include it in their estate-planning process.

Charitable giving is an essential financial and estate planning tool, whether you are inclined to give or searching for methods to reduce income or estate taxes.

You are able to include charitable giving in your estate plan in various ways. Here are a few well-liked techniques:

Specific Asset Gifts

Giving stock to a charity can result in significant tax savings if you've had the good fortune to invest in a stock that has appreciated significantly. An individual may donate an asset to a charity instead of paying short-term profits at regular income rates or long-term capital gains between 15 to 20 percent. From the taxpayer's point of view, the cost basis will be disregarded, and the taxpayer is allowed to deduct the entire step up in basis.

Assets can be gifted directly to a recipient or through a trust or will. Both are valuable instruments for estate planning. However, it's crucial to remember that charities frequently go by similar names and should be distinguished as such.

Donor Advised Funds 

Donor-advised funds (DAFs) are a progressively more well-liked means of making charitable contributions. You obtain an instant tax deduction when you make an asset contribution to a DAF. You can suggest grants from the fund to your preferred nonprofits over time.

In Your Will, Make a Charitable Gift

A will specifies what you want your assets to be done with after you die. A will can be used to specify a charity bequest and set up trust funds for certain charities, in addition to determining who receives what. One of the simplest methods to donate to charity through estate planning is to name a charity as the beneficiary of your will or living trust. Furthermore, it can reduce the size of your taxable estate and any estate taxes.


Life Insurance Gifts

Contributions of life insurance policies or earnings are analogous to naming a charitable organization as the beneficiary of a retirement account. The funds can be received by the charity and used for general purposes. If you provide the value of ordinary insurance, the gift is tax-deductible at the time of giving. Annual premium payments are tax-deductible as charitable contributions. If the policy is paid in full and donated to charity, the value of the charitable deduction is equal to the cost of acquiring a new paid-up insurance at your present age.

Make a Charitable IRA Rollover Contribution

You can choose a charity as an IRA beneficiary, but you can also take advantage of charitable tax relief for IRAs. People can donate up to $100,000 per year to charities directly from their IRAs, and the amount can be deducted from any required minimum distributions (RMDs). However, there is a benefit to this option: donating funds straight from your IRA is deemed a qualified charitable distribution (QCD), which allows you to exclude the amount from your income and avoid paying taxes on it.

Establish a Charitable Remainder Trust.

Setting up a charitable remainder trust is another option for giving back while you're still living. This allows you to make tax-free donations while lowering your taxable income. Consult your financial planner or accountant about setting up a charitable remainder trust using cash from other accounts.


One of the most common mistakes people make when establishing charitable giving as part of their estate plan is failing to complete the necessary paperwork correctly or selecting the incorrect vehicle, which can result in charity receiving only a fraction of what you planned. This is why it is advisable to contact professionals and work with reputable experts to ensure that everything is set up appropriately.

Making charity giving a part of your estate plan has numerous advantages, both for you and for the worthy charities you wish to support. So, if you want to do something spectacular with the fortune you've amassed over the years, you should call your Chief Financial Officer right away.