Are you interested in leaving a charitable legacy when you die? There are many ways to include your favorite charity in your estate plan.
Non-profit organizations survive on generous giving by their patrons. You may be regular contributor to your church or you may support your local humane society or arts organization. You may be particularly proud of your alma mater. (Go Cats!)
And you can easily include these worthy causes in your estate plan.
Many folks don’t think to include a charitable organization in their estate plan because they think that they don’t have much to leave behind. What would XYZ charity do with a $1,000? That may be a small drop in the bucket for some large organizations, but I’m pretty sure that any non-profit would be thrilled to receive a check in the mail for $1,000 (or any other amount). And imagine the impact that would happen if 10 people (or 100 people) did the same thing? The impact could be huge.1
So how does someone with even a modest estate leave behind a charitable legacy? There are several ways:
A Fixed Sum
Assuming your estate is large enough to satisfy the bequest, you can leave a fixed sum to a charity (or sums to multiple charities). For example, I give $5,000 to XYZ charity. You can leave whatever sum you choose to charity – the amount could be $100 or it could be $100,000. Just like making a charitable gift while you are alive, the amount and recipient is entirely up to you!
You can also choose to make your gift restricted or unrestricted. An unrestricted gift can be used in any way by the charity to whom it is given. A restricted gift, however, has strings attached: it can only be used for the particular purpose that you state in your will or trust.
A specific legacy is a gift of non-cash property to a beneficiary named in your will. For example, you could leave an instrument to your place of worship, or a piece of art to a museum, or you could leave stock to your charity of choice. There can be some additional tax benefits by utilizing certain specific legacies when the recipient is a charitable organization. But it is important, too, to remember that you must own the property mentioned at the time of your death.
Many of my clients have chosen to include a charitable organization as a residual beneficiary. Imagine you’ve ensured that your family and friends are provided for and assets remain: you could leave a percentage (1% to 100%) to a charity or charities.
I have also seen situations where charities are named as the contingent residual beneficiary. Imagine your will leaves everything to your wife and kids. In the unfortunate scenario that they all predecease you, you could name a charity as the residual beneficiary. The charity would only receive the residuary of your estate if all of the other beneficiaries predecease you.
You may also be blessed to be able to leave a larger amount to charity. Charitable remainder trusts and charitable lead trusts are two mechanisms that can leave a significant amounts to both a charity as well as a non-charitable beneficiary. Charitable gift annuities are conceptually similar to a trust. A private foundation can be costly to run, but can offer significant tax benefits and provide employment opportunities for family to help manage the foundation. Both charitable trusts and private foundations can offer significant tax savings.
The Next Step
The decision of whether or not to include a charitable organization in your estate plan is entirely yours, as is the decision of how to leave your charitable legacy. If you have questions about leaving a charitable legacy about setting up your estate plan, please contact the Brackney Law Office, PLLC or click here to learn more about estate planning. You can also call (859) 559-4648 to speak with an attorney.
What’s your legacy?
- A study in the United Kingdom found that 35% of Britons would happily include a charity in their estate plan after providing for family and friends. But only 6.3% of Britons actually include charitable provisions in their Wills. A 4% change in behavior would generate an additional £1 billion for good causes in the the United Kingdom every year. There could be real change on this side of the pond, too.