People may choose to include a charity in their estate plan for a variety of reasons, including leaving a legacy for an organization or cause close to their heart. They may also want to consider the other benefits of charitable estate planning, including tax savings.
Stock and charitable rollovers
If the donor has publicly traded stock that has appreciated in value, he or she may want to consider giving the stock to a charity during their lifetime. When the stock is given to charity, the donor will receive a charitable income tax deduction. This equals the fair market value of the stock at the time the gift was made.
Individuals may also want to donate to charities from their individual retirement account (IRA). This may be an option for donors who do not need a distribution from their IRA to pay for their living expenses.
Bequest and beneficiary
Donors can also leave a bequest in their will or revocable trust for the charity. It can state the amount the individual wants to leave to the charity, identify the charity they’d like to receive the money and list the purpose for which the charity should use it, either general as the charity sees fit or for a specific purpose.
Individuals can also name the charity as the beneficiary of all or a percentage of non-Roth retirement accounts. The charity can withdraw the assets from the retirement account without paying income taxes on the withdrawal.
These are only some examples of charitable estate planning and tax outcomes will be dependent on each individual’s circumstances. An experienced estate planning attorney can provide advice.