Effective estate planning can provide a way to support the people, organizations, and causes that matter to you. If there is a charity or organization you care about, your estate plan can provide a way to support it after your lifetime. Charitable planning can be incorporated into a will, trust, or certain beneficiary designations.
The right approach depends on your assets, family circumstances, charitable goals, and how the rest of your estate plan is structured.
Can You Leave a Charity Money in a Will?
Yes. A will can direct money or property to a charitable organization after your death. This is commonly called a charitable bequest.
You may choose to leave:
- A specific dollar amount
- A particular asset
- A percentage of your estate
- The remaining portion of your estate after other gifts are made
For example, you could leave $10,000 to a nonprofit and divide the remainder of your estate among your family. Or, you could leave a percentage of your estate to the charity, allowing the amount to change as the value of your estate changes.
The charity should be identified clearly in your estate documents. It is also important to consider what should happen if the organization changes its name, merges with another organization, or no longer exists when the gift takes effect.
Can a Trust Include a Charity?
A trust can also provide for a charitable organization. For example, a trust might provide for family members while directing a specific amount or percentage of the remaining trust property to a charity.
If you already have a trust, charitable planning can be incorporated into the trust’s instructions rather than handled through a separate will provision.
However, creating a trust does not automatically place every asset under the trust’s control. How an asset is owned and whether it has a beneficiary designation can affect how it passes after death.
Mason Law & Planning Group’s trust planning services can help you consider how charitable giving fits within your overall estate plan.
Don’t Forget About Beneficiary Designations
Not every asset passes through a will or trust. Certain retirement accounts, life insurance policies, annuities, and financial accounts may pass according to a beneficiary designation.
A charity may be named directly as a beneficiary of some of these assets.
For example, someone could name a charity as the beneficiary of a life insurance policy while using a will or trust to distribute other property.
This is why charitable planning should be considered alongside your beneficiary designations. A will may say one thing while an account’s beneficiary designation directs that asset somewhere else.
For more information about keeping these designations aligned with your estate plan, see Mason Law & Planning Group’s guide on naming estate beneficiaries effectively.
What Should You Consider?
Before adding a charitable gift to your estate plan, consider:
Which organization should receive the gift? Use the charity’s correct legal name and identifying information.
What do you want the charity to receive? A specific amount, percentage, asset, or remainder of your estate may produce different results.
How does the gift fit with your family plan? If you also want to provide for a spouse, children, or other beneficiaries, the charitable gift should be coordinated with those provisions.
Are there tax considerations? Qualifying charitable transfers may receive favorable federal estate-tax treatment, but the rules depend on the type and circumstances of the gift. Tax results should be evaluated based on your individual situation.
A Simple Example
Imagine a Monument resident wants to leave $20,000 to a local nonprofit while also providing for two adult children.
The charitable gift could potentially be included in a will or trust, with the remaining assets distributed to the children. If the person also has retirement accounts or life insurance, those beneficiary designations should be reviewed as part of the same plan.
The appropriate approach depends on the person’s assets, existing documents, family circumstances, and charitable goals.
Make the Gift Part of the Bigger Plan
Charitable planning is not simply about adding a charity’s name to a document. Your charitable gift should work with your will, trust, beneficiary designations, and other estate-planning documents.
If you want to support a charitable organization after your lifetime, Mason Law & Planning Group can help you discuss how that goal may fit into your estate plan. Whether you are creating a new plan or reviewing an existing one, charitable giving can be considered alongside your family’s needs and the assets you own. Contact Mason Law to discuss how to incorporate charitable planning into your estate plan.