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Giving to Charity as Part of Your Estate Plan

09/16/2016

Giving to Charity as Part of Your Estate Plan

People choose to donate all or part of their estates to not-for-profit organizations for a variety of reasons, and estate planning laws in most states make this a fairly easy process. It can be very rewarding to use a donation to create a legacy that supports a cause that matters to you.

“You can leave an unlimited amount to a charity,” says fosters.com’s article “Giving to charity an option in estate planning.”

There are many reasons why individuals may elect to will or otherwise donate to a charity at their death. For example, they may not have a close family to inherit the assets in their estate, or they may be committed to an organization.

What’s important to you? That is a question an experienced estate planning attorney will ask if you’re considering donating to a charity. You can leave a specific dollar figure, a percentage of the value of the estate or the whole thing.

The assets the charitable organization is able to receive from an estate will vary. For instance, checking or savings account funds, as well as stocks owned by the individual who wants to donate, will not require the charity to pay taxes—provided it’s a registered non-profit. But it’s a different story for tangible assets. Furniture and personal items must go through the probate process.

You need to do some advance planning now to prepare for an after-death charitable donation. In our example of money in a bank account, forms must be completed at the bank to designate the charity as the recipient of the assets upon your death. Shares of stock can be transferred to the charity by arranging it with the broker or by doing so in a will or trust. The charity would receive the increase in value of the stock. The transfer of shares means that the charity will get the value but will not have to pay taxes on the gains.

You can also direct the charity in how you want the gift used, such as for a new building or for a scholarship. Many non-profits would be happy to have your inheritance—like colleges and universities, religious organizations and animal shelters.

Something to keep in mind: you’ll want to speak with an estate planning attorney to figure out the best way to make a donation. There are instances where things happen at a non-profit where you may feel differently about making a gift. The organization may shift its focus (this is known as “mission creep”), or there may be a significant change in leadership. If you change your mind about the gift, you’ll want to be able to do so without incurring large expenses.

Reference: fosters.com (August 29, 2016) “Giving to charity an option in estate planning”

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