Charitable Giving and Your Estate Plan


There are many ways to remember the THANC Foundation or your other favorite charities in your estate plan, ranging from the simple to the complex. Doing so allows charities like THANC to carry on with their important work and can result in valuable benefits for your estate and your heirs.

The most common way to benefit a charity is with a simple bequest in your will or revocable trust. You can make a cash bequest, or allow the charity to share in a fixed percentage of your estate. Having your estate planning attorney prepare your documents to include such bequests is simple, and the cost is relatively low.

A charitable bequest could help reduce estate taxes in your state.

You can also make a charitable bequest by designating a charity as the beneficiary of a “non-probate” asset (i.e. an asset that passes directly to the beneficiary, outside the terms of your will). For example, you could establish a bank or brokerage account and designate the balance in the account to be “payable on death” or “transfer on death” to a charity. Alternatively, you can designate a charity as the beneficiary of all or a portion of a life insurance policy or a retirement fund. Beneficiary designations can be revoked or changed at any time, and the potential gift to the charitable beneficiary can be increased or decreased by adding or removing funds to or from the account. Beneficiary designations are relatively easy to make without the assistance of an attorney, so there is little or no cost to put them in place. Since charities are exempt from income tax, any portion of a retirement or tax deferred account payable to a charity will escape income taxation.

The individual federal estate tax exemption is currently $5.45 million. This means, with proper planning, a couple can shelter almost $11 million from federal estate tax even without the benefit of a charitable bequest deduction. However, even if your estate is under the federal estate tax thresholds, many states have their own estate tax with smaller exemptions, including New York, New Jersey, Connecticut, Vermont and Massachusetts. Therefore, even if you do not have a federally taxable estate, a charitable bequest could help reduce estate taxes in your state.

Implementing a charitable bequest in your estate plan can be done in a number of ways and can be a powerful tool to provide benefits not only to the charity of your choice, but to your estate and your heirs. As you plan your estate, we hope you will consider listing THANC as a beneficiary.