Have you ever asked yourself, how much is enough? You build a home, take care of your family, and somehow amass a small fortune of money and assets. However, have you ever wondered, what will you do with your wealth when you’re gone from this world?
For most individuals out there, sharing their resources and talent with the world is a way of life. If your kids are already well set in their lives, do you plan to support them while continuing to give to the causes you support?
Whatever the case might be, you should consider creating a will sooner rather than later to answer these questions.
That said, people give to charity for various reasons – To donate to a cause they’re passionate about, to honor a loved one’s memory, or to do something for society. So, if you’re someone who wants to support non-profit organizations or communities with disadvantages, planning for charitable giving is vital for any will.
In fact, take some time out of your busy schedule and discuss planned giving with your attorney today because doing so will allow you to structure your giving plan properly and enable you to take advantage of tax deductions as a bonus.
In the end, giving a portion of your wealth will bring you a sense of accomplishment you always wanted. With that in mind, let us look at a few ways you can donate to a charity of your choice through your will.
1. Bequest in a revocable trust or your will.
A direct and easy way to donate to charity is to leave a bequest in a revocable trust or your will. For instance, if you planned giving to The American Cancer Society or your local community shelter, you’ll be remembered by thousands for your donations after you’ve passed away.
This method of charitable giving is a sentence in your will which states the amount of money you would wish to donate to charity, the purpose of your donation while also identifying the particular charity you want to contribute to.
Also, using the correct name of the organizations you want to contribute to via your will is crucial because some charities have similar names. So, if you’re not accurately naming the charity of your choice in your estate planning or will, it will create confusion, and the charity might not get the assets or money you’ve left for them.
As far as listing a purpose goes, ensure that you’re specific about the details. That said, you can always categorize the gift as ‘general-purpose.’ Meaning that your charity of choice can use the funds you’ve donated to them in any way they want.
However, if your request is very particular, consider calling the development office to ensure that the charity of your choice can fulfill it.
2. Consider a Charitable Rollover.
If you’re over the age of seventy years and six months, you can mention in your will that you would like to donate $100,000 to a charity of your choice directly from your IRA account. Such a type of charitable giving is commonly referred to as QCD ( qualified charitable donations).
Plus, there are tons of benefits you can leverage when donating to charity via your IRA account. For instance, the amount you donate via QCD will count towards the minimum required distribution amount you must make out of your retirement account after reaching a specific age.
Furthermore, according to the SECURE Act, the age of individuals who must take the minimum required distribution increases from seventy years and six months to seventy years effective April 1st, 2020.
Therefore, these minimum required distributions are categorized under income tax, and the IRS will tax you at standard rates, allowing you to decrease your tax consequences.
3. Consider a CRT (Charitable Remainder Trust).
You will benefit both a family member and a charity by creating a CRT( Charitable Remainder Trust) and naming the CRT as a beneficiary to your IRA account in your will. A charitable Remainder Trust is a split-interest trust where a particular person you nominate will get payments from the CRT for a specific amount of time.
However, when the designated person has no interest left in the CRT, the remaining payment will be handed over to the charity of your choice.
That said, a CRT operates according to particular rules, including the amount of money the nominated person will receive from the CRT and the time duration they receive it for. The best thing about a CRT is that it will be exempted from income taxes at the time of your death.
4. Donate appreciated stock.
If you have traded in public stocks that have appreciated over time, consider donating these appreciated stocks to a charity by stating so in your will. Moreover, suppose you give stocks to a charity of your choice instead of money. In that case, you will be doing a good service for society while leveraging various charitable tax income deductions in the process.
These deductions will be equal to the actual market value of the stocks themselves. Not to mention, doing so will allow you to avoid capital gains taxes.
Once you’ve stated in your will that you want to donate your appreciated stocks, the charity of your choice can then sell them and utilize the money they obtain while avoiding paying capital gains taxes.
5. Inform the charity of your donation.
Since all charities rely on gifts and donations to operate, they can quickly and easily forecast their finances when they know about your charitable giving beforehand. After all, most non-profit foundations and organizations appreciate the donation and gifts from donors like you!
In fact, most charities and non-profit organizations have a dedicated page on their website under ‘Legacy Giving’ or ‘Planned Giving,’ where you will typically have to fill and submit a form to reach and notify the charity’s team that you’ve left a donation for them in your will.
That said, before you do such a thing, consider contacting your attorney to name your favorite charity as a beneficiary in your will.
Donating money or assets to a charity(s) of your choice in your will or estate plan is a surefire, meaningful way to support a cause that you believe in. After all, a bequest will cost you nothing, considering the amount of impact you will leave on this world via your favorite charitable organization when you’re long gone from this world.
So, whatever method you utilize to donate to charity through your will, get in touch with your lawyer today and ensure you’re doing the right thing – helping society!