Charitable Giving Strategies: Incorporating Philanthropy into Your Estate Plan

Giving to a cause you care about doesn’t have to wait until the end of your life. But if you want your charitable values to last beyond your lifetime, your estate plan is the place to make it happen. In New York, there are several ways to include philanthropy in your estate plan that are both meaningful and tax-efficient.

Whether you want to support a local nonprofit, your alma mater, or a national foundation, incorporating charitable giving into your plan can reduce estate taxes, create a legacy, and ensure your assets are used in ways that reflect your beliefs. The key is choosing the right approach for your goals and financial situation.

Why Charitable Planning Matters in an Estate

Most people think of estate planning as a way to pass assets to family members or avoid probate. But it also offers a chance to support the organizations that align with your values. Whether it’s education, environmental conservation, health care, or the arts, charitable gifts through your estate plan can have a long-lasting impact.

Planning your giving in advance also gives you more control. You decide where the money goes, how it’s used, and whether your name is associated with the gift. In some cases, you may also receive tax benefits during your lifetime.

Start with Your Goals and Priorities

Before diving into specific tools, take a step back and think about what you want to accomplish. Are you hoping to leave a lump sum to a favorite charity? Do you want to fund a scholarship or research program? Are you looking for a way to give annually, even after you’re gone?

Your answers will shape the type of planning strategy that fits best. You’ll also want to consider whether you prefer to make anonymous donations or if you’d like to leave a legacy in your name or your family’s name.

Naming a Charity in Your Will or Trust

One of the simplest ways to include charitable giving in your estate plan is by naming a nonprofit as a beneficiary in your will or living trust. You can leave a specific dollar amount, a percentage of your estate, or the remainder after other gifts are made.

This type of gift is known as a bequest, and it can be unrestricted or earmarked for a specific purpose. For example, you could say:

• “I leave $25,000 to ABC Animal Rescue.”

• “I give 10 percent of my estate to XYZ Hospital Foundation to support cancer research.”

Bequests are flexible and easy to change if your priorities shift later in life. They also allow you to keep full control of your assets during your lifetime.

Using Retirement Accounts for Charitable Gifts

Another smart option is to designate a charity as a beneficiary of your retirement account—such as an IRA, 401(k), or other tax-deferred plan. These accounts are often taxed when inherited by individuals, but not by qualified nonprofits.

By leaving retirement funds to a charity, you avoid the income tax that would otherwise apply and allow the full value to benefit the cause. Meanwhile, you can leave other, more tax-friendly assets to your family.

This strategy doesn’t require updating your will. You simply change the beneficiary designation form through your account provider. It’s an easy but powerful way to make a lasting contribution.

Qualified Charitable Distributions During Your Lifetime

If you’re age 70½ or older, you may be eligible to make a Qualified Charitable Distribution (QCD) from your IRA directly to a qualified charity. This allows you to donate up to $100,000 per year without counting it as taxable income.

While QCDs aren’t part of your estate plan, they can reduce the size of your taxable estate and fulfill your Required Minimum Distributions. This makes them a useful strategy if you’re already charitably inclined and looking to give while alive.

Creating a Donor-Advised Fund

A donor-advised fund (DAF) is a flexible giving tool that lets you set aside money for charity now, receive an immediate tax deduction, and decide later which organizations will receive the funds. You can also involve your children or other family members in recommending grants.

Though a DAF doesn’t replace your will or trust, it can work in tandem with your estate plan. For example, you can name the fund as a beneficiary of a retirement account or direct a portion of your estate to establish a new fund that supports causes important to you.

DAFs are especially useful for people who want to centralize their giving without the complexity or cost of setting up a private foundation.

Establishing a Charitable Remainder Trust

For those with significant assets or more complex goals, a charitable remainder trust (CRT) may be a good fit. This type of trust provides income to you or your beneficiaries for a set period, after which the remaining funds go to a charity.

A CRT offers several potential benefits:

• Lifetime income for you or loved ones

• Immediate charitable income tax deduction

• Reduction of estate taxes

• Support for one or more charities after the trust ends

It’s a more advanced strategy that requires legal and financial guidance, but it can provide both personal financial benefits and long-term charitable support.

Communicate Your Wishes Clearly

Whatever method you choose, it’s important to communicate your charitable goals clearly in your estate documents. Work with an estate planning attorney to ensure your wishes are legally enforceable and structured in a way that avoids unnecessary tax burdens.

You may also want to speak directly with the charities you intend to support. Many have staff who can help ensure your gift is used in a way that aligns with your intentions, and some may offer recognition or naming opportunities.

Review Your Plan as Life Changes

Charitable priorities can change, just like financial circumstances and family needs. A charity you care about today may not exist in twenty years—or you may discover a new cause later in life that resonates more deeply.

Make it a habit to review your estate plan every few years, or after any major life event. That way, you can adjust your giving strategy and keep your plan aligned with what matters most to you.

Conclusion

Your estate plan isn’t just about passing on assets. It’s a chance to shape how you’ll be remembered. By including charitable giving, you create a lasting impact that reflects your values and helps future generations.

If you live in New York and are ready to explore how philanthropy can be part of your estate plan, our team is here to guide you. We can walk you through the available options, explain the legal and tax implications, and help you create a plan that feels both meaningful and practical. Reach out today to schedule a consultation. Let your legacy do more for your family and the causes you care about.