Charitable Giving Options: Not Just For the Holiday Season

 

Charitable Giving Options: Not Just For the Holiday Season

The desire to make a difference doesn't end when we die. For many people, incorporating charitable giving into their estate plans allows them to support causes they care about while creating a lasting legacy. Whether you want to establish a scholarship fund, support medical research, or help your local community, thoughtful charitable planning can maximize your impact while potentially providing tax benefits for your heirs. 

Let's explore how you can include charitable giving in your Life & Legacy Plan.

Understanding Your Charitable Giving Options

You have several options to consider regarding charitable giving through your estate plan. The key is finding the approach that best aligns with your values, goals, and overall estate planning strategy. Some standard methods include:

Direct Bequests: The most straightforward way to include a charity in your estate plan is through a direct bequest in your will or trust (“bequest” simply means leaving something to someone in your estate plan, whether it’s money or personal belongings). You can specify a fixed dollar amount or percentage of your estate to go to your chosen charitable organizations. This approach provides flexibility and can be easily modified if your circumstances change.

Note that for tax purposes generally, any charitable bequest (to a “qualified” charity per the IRS, typically a 501(c)(3) organization) is tax deductible and will reduce the tax liability of your estate. However, if you want to receive a tax deduction now, give an outright gift. In 2025, you can give up to $19,000 to each person or organization without reporting the gift to the IRS or paying gift tax. 

Required Minimum Distributions with Qualified Charitable Distributions (QCDs). If you're over 70.5 (or have parents who are) and don't need your required minimum distributions (RMDs) from your retirement accounts to live on, here is a tax-saving, life-affirming strategy: Consider making a qualified charitable distribution (QCD) of your RMDs to a 501(c)(3) of your choosing before year-end, and lower your taxes, support your favorite cause or movement, and possibly kick yourself down into a lower tax bracket for your other taxable income. You can distribute up to $108,000 directly to a 501(c)(3) public charity of your choice. 

Charitable Trusts: For those with larger estates, philanthropic trusts offer sophisticated ways to benefit charity and your heirs. A charitable remainder trust can provide income to your beneficiaries for a set period, with the remaining assets going to charity. Conversely, a charitable lead trust can provide income to charity for a period, with the remainder going to your beneficiaries. Note that charitable trusts are typically used to save money on capital gains tax as part of a sale transaction.

Donor-Advised Funds: A donor-advised fund (or DAF) is a way to make charitable contributions during your lifetime to a fund that is then invested and managed by a fund manager. As the donor, you can recommend grants to your favorite charities over time. When using a DAF, you can name successor advisors, enabling your children or other loved ones to continue your charitable legacy through your DAF after you're gone. Gifting to a donor-advised fund is similar to gifting to a family foundation but with minimal administrative time or energy required. Conversely, DAFs are often not used as intentionally as they could be. If you have a DAF or want to set one up, let’s discuss what I mean by this so you can use yours as intentionally as possible. 

Family Foundation: The private family foundation is the way to go for families with more significant assets and a desire to govern and control the use of those assets while also creating a lasting legacy. With a private foundation, you control the investments, the governance, and the distributions and can use the foundation as a multi-generational educational tool for the family.

Making Your Charitable Giving More Effective

To ensure your charitable giving achieves maximum impact, consider these important factors:

Tax Implications: While tax benefits shouldn't be the primary motivation for charitable giving, proper planning can help reduce estate taxes and maximize the impact of your gifts. Specific charitable giving strategies, as discussed above, can provide immediate income tax benefits during your lifetime while reducing estate taxes after your death.

Timing of Gifts: Consider whether making charitable gifts during your lifetime might be more beneficial than waiting until your death. Lifetime giving allows you to see the impact of your generosity and may provide immediate tax benefits. 

Selection of Charities: Research potential charitable recipients carefully. Look for organizations with strong track records of effectively using donations to advance their missions. Consider whether you want to support large national organizations or smaller local charities.

Involving Your Family

Charitable giving through your estate plan can do more than just support worthy causes – it can help instill philanthropic values in future generations. Consider these approaches:

Family Discussions: Talk with your family about your charitable intentions and the causes that matter to you. These conversations can help your loved ones understand your values and motivations and potentially inspire their charitable giving.

Collaborative Decision-Making: If you establish a donor-advised fund or family foundation, involve your children or grandchildren in grant-making decisions. This hands-on experience can help them develop their philanthropic interests while carrying forward your legacy.

Educational Opportunities: Use your charitable giving as a teaching tool to help younger family members learn about financial responsibility, social issues, and the importance of giving back to the community.

Creating Your Charitable Giving Plan

We can help you develop a comprehensive charitable giving strategy aligning with your estate planning goals. We’ll work with you to:

• Identify the philanthropic causes most important to you
• Select the most appropriate vehicles for your situation
• Structure your giving to maximize tax benefits
• Ensure your charitable intentions are appropriately documented
• Create a plan for involving future generations

We'll also help you maintain flexibility in your plan, recognizing that charitable organizations and family circumstances can change over time. By thoughtfully incorporating philanthropy into your Life & Legacy Plan, you can create positive change extending beyond your lifetime while potentially providing tax benefits for your loved ones.

 

How We Help You Create a Meaningful Legacy

We help you create a comprehensive Life & Legacy Plan with charitable giving strategies aligned with your values and goals. We'll work together to ensure your philanthropic wishes are correctly documented and structured for maximum impact while keeping your family out of court and conflict. With your charitable giving plan in place, you can rest easy knowing you've created a meaningful legacy that will benefit your loved ones and the causes you care about most.

Contact us today to get started:  https://calendly.com/myachorlaw/15min

This article is a service of Attorney John F. Koenig, Anchor Law, Life and Legacy Planning, LLC, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a comprehensive Life & Legacy Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Life & Legacy Planning Session™.

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® Firms, a source believed to provide accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.