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Can you donate to charities through your estate plan?

Can you donate to charities through your estate plan?

On Behalf of | May 2, 2021 | Estate Planning

As you put together your estate plan, you may want to leave some assets to charity. Charitable giving usually requires some thought so that you can choose the option that you think best fits your situation.

There are several ways you might donate to charities after your death.

Write out a bequest

According to Kiplinger, you can include a statement about charitable donations in your will. This statement indicates which charities should receive money and how much you want to give them. If you want a charity to use your donation for a specific purpose, you may also include this in the bequest.

Create a trust

Another option is to set up a charitable remainder trust. In this situation, you would name a family member and a specific charity as the beneficiaries of the trust. Your family member would receive payments for a certain amount of time, and then the charity would receive the rest of the funds. The funding for this trust usually comes from your IRA.

Use your retirement account

After your death, there may still be funds in your retirement account. You may list charitable organizations as your beneficiary. You can direct all of the funds to one charity or you may specify that a certain percentage will go to several different nonprofits.

As you decide how you want to donate, you should also consider the tax implications. Charitable bequests, for example, often decrease the amount of estate tax. Charitable remainder trusts are typically also tax-exempt. The option that you choose may also affect how much your family members will receive after your death.

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