Jar of coins over blue background - representing charitable giving.

How to Include Charitable Giving Into Your Estate Plan

Making a charitable contribution is relatively easy. You can give cash, transfer stock options, or write a check to the charity of your choice. Giving to charities and receiving a tax deduction in return is a process that many Americans take part in every year. At Surprenant & Beneski, PC, our legal team helps incorporate even more giving strategies into your estate plan. 

1. Name a Charity of Your Choice As the Beneficiary

One relatively easy way to give to charity is to name a charity as your beneficiary. You can name a charity as the beneficiary of your non-Roth retirement accounts, your trust, or your will. Qualified charities are tax-exempt. The charity will be able to withdraw assets from your retirement account or trust without paying income tax on the amount they withdraw. 

2. Create a Charitable Remainder Trust

A charitable remainder trust (CRT) is an irrevocable trust. Charitable remainder trusts allow you or a beneficiary to use a stream of income generated by assets in the trust. You can choose whether you want the trust’s income to go to a beneficiary or yourself. The trust pays out annuities for a set length of fewer than 20 years or for the life of the beneficiary. When the term ends, or the beneficiary dies, the assets transfer to the charity or charity of your choice. Choosing IRS-approved charities is essential when making donations. 

3. Use a Charitable Rollover

If you are over 72, you can donate up to $100,000 each year to charities from your IRA. These types of donations are known as Qualified Charitable Distributions. Under the SECURE Act, recently passed by Congress, required minimum distributions of an account holder must come from the IRA. Required minimum distributions are considered taxable income. The benefit of using a Qualified Charitable Distribution is that it allows you to fulfill your required minimum distribution requirements and allows you to exclude that amount from your taxable income.

4. Donate to Charity in a Revocable Trust or Your Will

You can choose to bequest assets to a charity in your will or a trust. State in your will that you’d like to leave a particular amount to a charity. Be sure to identify the charity of your choice. You can also state how you’d like the charity to use the funds if you’d like. Be sure to use the legal name of the charity, so there is no confusion. 

One benefit of charitable gifts is they are eligible for state tax deductions. Donating to a charity or charities in your will or via a trust will count as an eligible tax deduction. Qualified deductions will reduce the amount of estate taxes your estate must pay. The fewer estate taxes owed, the more assets your other beneficiaries will receive.

5. Make a Tax Free Gift

You can give a tax-free gift of $15,000 per person each year that is tax-free. You can choose to give that amount of money to your grandchildren, children, or friends. The benefit of giving away money is that you will reduce the assets within your estate. Another benefit is that the recipients of the gift will not need to pay tax on the amount they’ve received. Tax-free gifts are especially helpful when you need to bring your total estate value down below the limit for federal and Massachusetts estate taxes. 

We Can Help

If you need help incorporating charitable giving into your estate plan, the experienced estate planning team at Surprenant & Beneski, PC, can help. Contact our legal team today to schedule your initial consultation.