Including Charitable Giving in Your Estate Plan

Do you regularly donate money to a favorite charity? If so, you may want to explore the option of naming that charity in your estate plan.

This recent article from NPR suggests that the practice of financially supporting a charity is gaining popularity among younger generations.

Many people consider tithing—that is, setting aside a portion of income for the purpose of making regular donations—a normal part of attending their church, mosque, or synagogue. Charities, such as churches, depend on the financial gifts of loyal congregants and supporters to fulfill the beneficent mission of their charters.

While not entirely uncommon, only a small portion of clients ask their estate planning attorney to help them name a charity as a beneficiary in their last will and testament. After all, the majority of people have family, such as a spouse or children, whom they would like to acknowledge. Nevertheless, even families have lasting ties to a favorite charity.

There are two ways to include a charity as a beneficiary in your will. One way is by simply adding the charity to your beneficiaries and ranking it in the order in which you prefer. This is called a “general disposition.” For example, let’s say you would like your spouse to inherit your entire estate, but upon his or her passing, the estate gets split up equally among your beneficiaries. You could name the charity as either an equal party to the distribution or a third successor beneficiary.

The other method would be to use what is known as a “specific bequest.” Here, the gift to a charity is given priority over the general dispositions, including the named spouse and children.

If you are using a trust, the process is similar. Setting up a charitable trust goes many steps further, as it is an irrevocable estate planning tool. This type of trust is usually reserved for those folks with over $1 million in disposable income who have very strong philanthropic ambitions.

Interested? Speak to an experienced estate planning attorney to discuss the best option available for you and your family.