Americans are some of the most generous people in the world. According to the Philanthropy Roundtable, “Six out of ten U.S. households donate to charity in a given year, and the typical household’s annual gifts add up to between two and three thousand dollars. This is different from the patterns in any other country. Per capita, Americans voluntarily donate about seven times as much as continental Europeans. Even our cousins the Canadians give to charity at substantially lower rates, and at half the total volume of an American household.”
Keeping these amazing statistics in mind, it should come as no surprise that many Americans include a charitable donation in their estate plan. At Palmer & Slay, we often advise our Brandon, Mississippi area clients on the best ways to include charitable gifts in their estate plans.
While a straightforward “I leave $X to Charity ABC” written into a will may work in some instances, there are many situations where a bit more advanced planning will benefit you, your loved ones, and the charities you support. Below are X different options you may want to consider.
1. Deciding How Much to Give. Rather than saying you want to give $X to a specific organization it may make sense for you to gift in other ways.
If you want to make sure your loved ones are taken care of before your favored charities, you can gift the residual of your estate to charity. This means specific bequests to everyone named in your estate plan will be made, then whatever is leftover will go to the charity of your choosing.
Sometimes it works well to donate a specific percentage of your estate to a charity instead of a set dollar amount.
Gifts to charity can also make great backup beneficiaries. For example, say you want to leave some money to your sister, but she ends up passing away a short time before you do. The money you wanted to give her could instead be donated to a charity in her honor.
2. Naming a Charity as a Beneficiary. Just as you can name a spouse or other loved one as the beneficiary of your IRA, 401(k), or life insurance policy, you can also designate a charity as your beneficiary.
3. Giving Now. When a charitable gift made in a will decreases the amount of money left to family members, those family members may be upset enough to challenge the will in court. This is costly and frustrating for everyone involved.
There are two ways to avoid this outcome. First, be upfront with your family about the contents of your estate plan. If they aren’t surprised by what is in your estate plan, they are more likely to accept it. Second, consider doing more of your charitable gifting now so you know for sure your money will go where you want it to. Giving now has the added benefit of allowing you to see the good that comes from your donation.
4. Minimizing Taxes. If minimizing your tax burden is one of your top considerations, it may be wise to set up a charitable remainder trust or a charitable lead trust. These sophisticated trusts allow you to take advantage of charitable income tax deductions.
Preserving Your Wealth. Protecting Your Loved Ones.
The Palmer & Slay team is proud of the work we do to help our clients further their philanthropic goals. We love working with people who have a generous spirit, and a desire to give back.
If you need assistance crafting a personalized estate plan that makes your gifting goals a reality, while still accounting for other estate planning needs, our experienced attorneys are ready to work with you. Please contact us today to schedule an initial consultation.