FAQ: Can I Leave Money to Charity in My Estate Plan?
Short Answer: Yes. You can absolutely include charitable donations in your estate plan to ensure your legacy supports a cause that matters to you. With the help of an experienced Texas estate planning attorney, your charitable wishes can be legally protected and tax-efficient—without relying on family members to follow through after your passing.
How to Support a Worthy Cause After You Are Gone
Leaving money to charity can be as simple as including a statement in your will naming the organization and specifying the donation amount. For example, you could leave $1,000 to your local humane society to help fund supplies or programs.
If your estate is held in a revocable living trust, your charitable intentions should be written into the trust documents. It’s also a good idea to contact your chosen organization when creating your plan to confirm how they prefer to receive bequests or donations.
If you want to make a larger or ongoing contribution, a charitable trust can help you leave a lasting legacy while potentially reducing taxes and simplifying administration.
What Is a Charitable Remainder Trust (CRT)?
A Charitable Remainder Trust (CRT) allows you to:
-
Donate assets to the trust
-
Receive an income stream for life or a set term
-
Leave the remaining assets to a charitable organization after the trust period ends
This type of trust is ideal if you want to support a charity while keeping lifetime income.
Key Advantages of a Charitable Remainder Trust
-
Steady Income:
You or your beneficiaries receive regular income during your lifetime or for a defined period. -
Tax Benefits:
You may qualify for an immediate income tax deduction based on the present value of the remainder interest that will go to charity. -
Capital Gains Tax Savings:
Appreciated assets (like stock or real estate) placed in the trust can be sold without immediate capital gains taxes.
Potential Disadvantages of CRTs
-
CRTs are irrevocable, meaning once assets are transferred, you can’t take them back.
-
They can be costly to establish and maintain due to legal and administrative requirements.
-
You’ll need to be comfortable giving up control of those assets during your lifetime.
A CRT is best suited for individuals with appreciated assets who want to give to charity, receive income, and reduce taxes at the same time.
What Is a Charitable Trust?
A charitable trust is a legal arrangement that holds assets for one or more charitable purposes. Unlike a CRT, this type of trust does not provide income to the donor—it is fully dedicated to the chosen cause.
Advantages of a Charitable Trust
-
Worry-Free Giving:
Once established and funded, your gift is automatically distributed according to your wishes, bypassing probate and family disputes. -
Flexibility:
You can designate funds to support specific causes such as education, healthcare, the arts, or environmental protection. -
Tax Benefits:
Donors may receive tax deductions for the value of the charitable contribution.
Things to Consider
-
You won’t receive income from a charitable trust.
-
Once the assets are transferred, your control is limited.
Still, for many donors, this trade-off is worth the peace of mind and legacy it provides.
Why You Should Include Charitable Giving in Your Texas Estate Plan
Whether your goal is to leave a modest donation or a lasting foundation, charitable giving can easily be incorporated into even a basic estate plan. With proper legal guidance, you can:
-
Ensure your wishes are honored
-
Avoid family disputes or forgotten donations
-
Maximize your tax advantages
-
Create a lasting legacy that reflects your values
