5 Steps to Make Charitable Giving Part of Your Estate Plan

People helping people for good causes

There are a lot of good causes out there, with plenty of people and projects in need of support as they strive to make the world a better place. You might like to consider supporting them as part of your estate plan, making a charitable donation with the wealth you leave behind.

This can be a wonderful way to give something back to the world, leave a positive impression, and support a cause that matters or means something to you personally. It also feels great, which is why so many people opt to add a charitable donation to their estate plan.

But how does it all work? And what’s the best way to go about it? Read on through our five-step guide to learn all about charitable giving in estate planning.

Step 1: Define Your Charitable Goals

First up, you’ll need to plan out the goals of your charitable giving. What are you hoping to achieve? What kind of impact do you want to make? By setting out your goals and intentions, you should find the next steps of the process a lot easier.

You may even like to draw up an entire mission statement or charitable strategy. This could help you become much more efficient and effective later on when planning out the specifics of which charities you’ll give to and how much you’ll give them.

Step 2: Review Your Assets

With your goals outlined, it’s time to take a general review of your assets. Look at how much wealth you’ve got, what types of assets you have, and what you’re working with when it comes to charitable donations.

Remember, there are multiple types of assets that make up the average estate. It’s not just about how much cash you’ve got in the bank – assets also include any investments you’ve made, precious and valuable items, real estate, etc.

Step 3: Choose the Right Charitable Giving Vehicles

When it comes to charitable giving in estate plans, there are quite a lot of different methods, or “vehicles”, you can use. Take your time to compare and consider the various options available to you in order to pick the right vehicles to suit your estate and desires.

Make an Outright Bequest in Your Will

One of the most common charitable giving vehicles is simply a bequest in your will. In the same way that you might bequeath certain assets or items to relatives, you can choose to establish a bequest of certain assets or funds to a specific charity, or charities.

Contribute a Charitable Rollover from Your IRA

It’s quite a simple process to name a charitable organization as a beneficiary for some or even all of our retirement accounts, like an IRA. This can be a very simple way to ensure that a charity you care about receives funds from your estate.

Use Life Insurance or a Charitable Gift Rider

Life insurance is usually a key aspect of estate planning, and you can have a say in how the insurance payment is used. You can name a charity as a beneficiary on your policy, for example. A charitable gift rider is a similar idea, in which a percentage of the policy’s value goes to a charity.

Create a Charitable Remainder Trust

A charitable remainder trust is a nice way to give back while you’re still living and see the benefits of your generosity. It’s basically a tax-free way to donate money from your accounts to a charity, and it has the extra benefit of cutting down your taxable income.

Establish a Gift Through a Community Foundation

You can also work with a community foundation to set up a kind of charitable gift fund. This gives you the freedom to pick how much you want to give and who you want to give it to you, for as long as you desire. It’s one of the best ways to maximize the value of your donations.

Step 4: Consult with Professionals

Setting up funds or making changes to your will can be quite complicated, and it’s easy to make mistakes along the way. To ensure that you don’t fall into any of the common traps, make sure to contact trusted professionals, like an estate planning attorney and your accountant.

Step 5: Implement and Review Your Plan

Last but not least, with all the aspects of your plan measured and calculated, it’s time to put it into action. Again, you’ll most likely need some professional assistance with this, and it’s always best to go over your plan one final time before implementing it.

Tax Benefits and Incentives

There are quite a lot of potential tax benefits associated with charitable giving. More often than not, you’ll be able to exclude donations from your income, so you won’t have to pay taxes on them. If you set up a remainder trust, for instance, you can donate tax-free. Or, if you gift some appreciated stock, you won’t have to worry about paying capital gains tax on it.

Common Pitfalls to Avoid

One of the most common mistakes people make when setting up charitable giving as part of their estate plan is to not fill in the required paperwork correctly or choose the wrong vehicle, which can lead to charities only receiving a fraction of what you intended. This is why it’s best to contact the professionals and work with trusted experts to set everything up correctly.


Making charitable giving part of your estate plan has so many benefits, both for you and the great causes you want to support. So, if you feel like doing something wonderful with the wealth you’ve built up over the years, you might like to contact your estate planning attorney today and discuss some ways to make donations.

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