Charitable Giving and Estate Planning
For many Texans, giving back is part of the legacy they want to leave. A thoughtful estate plan can carry that generosity forward, supporting a church, school, or cause long after a person is gone. Charitable giving can also be structured in ways that benefit a family while benefiting a charity. Ellen Williamson Law explains below how charitable giving fits into an estate plan and the tools Texas families can use.
Why Include Charitable Giving in Your Plan
Adding charitable gifts to an estate plan lets you make a meaningful, lasting contribution to the causes you value. It is also a way to pass on your values, not just your assets, and to set an example for children and grandchildren. For some families, charitable giving carries tax advantages as well, though the personal motivation usually comes first.
Charitable intentions can be built into nearly any plan, whether the gift is modest or substantial.
Simple Ways to Give
Charitable giving does not have to be complicated. The most direct approach is a gift in your will, called a charitable bequest. You can leave a specific dollar amount, a particular asset, a percentage of your estate, or whatever remains after other gifts are made.
You can also name a charity as a beneficiary on a retirement account or life insurance policy. Because these pass by beneficiary designation, the gift is simple to arrange, and naming a charity as the beneficiary of a retirement account can be a particularly tax-efficient way to give. Reviewing these designations alongside the rest of your plan keeps everything coordinated.
Charitable Trusts
For larger or more structured gifts, charitable trusts offer additional flexibility. Two common forms are worth knowing.
A charitable remainder trust can pay income to you or your loved ones for a period of time, with the remainder going to charity afterward. A charitable lead trust works in the opposite order, providing support to a charity for a period before the remaining assets pass to your family.
These trusts can balance support for a charity with provision for a family, and they carry their own tax considerations. Because they are more complex, charitable trusts should be designed with both legal and tax guidance.
Donor-Advised Funds
A donor-advised fund is another flexible option. It is an account held at a sponsoring organization to which you contribute, then recommend grants to charities over time. Donor-advised funds are relatively simple to establish and let a family stay involved in giving across years, which can make charitable giving a shared family tradition.
Confirming a Charity’s Status
Before naming an organization in your plan, it is worth confirming that it is a qualified charity, particularly if tax benefits matter to you. The Internal Revenue Service maintains a searchable tool for verifying an organization’s tax-exempt status. Using the charity’s full legal name in your documents helps avoid confusion later.
Coordinating Charitable Gifts with Your Plan
Charitable giving works best when it is integrated with the rest of your estate plan rather than added as an afterthought. Your will, beneficiary designations, and any trusts should work together, and your gifts should fit alongside what you intend to leave family members. For larger estates, charitable giving can also play a role in the planning discussed in our overview of estate taxes.
Because circumstances and charitable priorities change over time, it is wise to revisit charitable provisions periodically, as described in our overview of updating your estate plan.
Get Help from a Texas Estate Planning Attorney
Ellen Williamson Law helps Texas families build charitable intentions into estate plans that also provide for the people they love. Our firm works with clients as a Dallas estate planning attorney, Dallas trust attorney, and Dallas wills attorney, as well as a Farmers Branch estate planning attorney. We offer flat-fee billing for most planning matters, so the cost is clear before any work begins.
To include the causes you care about in your plan, contact Ellen Williamson Law to schedule a consultation.