It’s never been easier to leave a portion of your estate to charity. We outline the types of legacy gifts and how to pick the right charity for your donation
No matter what stage of life you are in, estate planning is never an easy conversation to have. However, there are some positive incentives for having these difficult discussions. Incorporating charitable donations into your estate plan, for instance, not only provides significant tax benefits, it leaves behind a legacy that speaks volumes about your passions and generosity through helping support charities and touching lives.
Leave a Legacy Gift Through Your Will
Contrary to popular belief, you don’t need to be wealthy to have a lasting, positive impact. In fact, there are several ways to include charitable donations in your estate plan regardless of your financial situation. The simplest way is to leave a legacy gift through your will. Because there are many options for this type of planned giving, it is important to be clear in describing exactly what you would like carried out to make sure the gift is actually received.
Some of the more common forms of legacy gifts include a specific allocation of money or percentage of your total estate and designating any remaining assets after other requests are realized. You can also donate specific assets or items—such as real estate, personal property or proceeds of your life insurance policy—and even allot a donation contingent upon specific conditions being met ahead of time. Additionally, it may also be a good idea for an individual to name an alternate beneficiary if the charitable organization dissolves.
Financial Benefits of Including Charitable Donations
While the satisfaction and pride of having a positive impact play a large role in making this decision, there are also some financial benefits to consider. When you include charitable donations in your estate planning, the estate gets a tax deduction, and the charity will receive the funds after the estate is settled. People can also name a charitable organization as the beneficiary of their retirement account, which allows them to exclude those assets from their taxable estate. Individuals with a high net worth can also use a charitable remainder trust.
Choosing the Right Charity for Your Gift
Reputable charities and nonprofits often have legacy-giving programs, so if there is an organization you frequently support, it is worth looking into the planned giving options they offer. If you need help selecting a charity for your gift, there are two basic guidelines to help inform your decision:
- Identify the issues that you find the most important. Perhaps you want to support an organization that has helped you or a loved one in the past, or opt for an organization that can touch your local community. In any instance, it is important to decide if you want to donate to a local, national or international organization.
- Weigh your options. After you have a solid understanding of the causes you would like to support, research the organizations. Then, once that is narrowed down, pay careful attention to their mission statement, any measurable goals, results over time and the organization’s financial transparency.
To learn more about leaving a legacy gift to charity, connect with the experienced attorneys at ALA, who are well-versed in helping you plan for the future.