Guide: Charitable Giving & Estate Planning–A Legal Checklist

Charitable giving is a meaningful way to leave a lasting impact, support causes that reflect your values, and create a legacy that endures beyond your lifetime. When incorporated into your estate plan, charitable contributions can also provide significant tax advantages and ensure your philanthropic goals are carried out as intended.

At O’Connell and Aronowitz, we understand that charitable giving is both a personal and financial decision. Our estate planning attorneys help clients structure their giving to align with long-term goals, minimize tax implications, and provide peace of mind that their wishes will be honored.

This guide outlines key legal considerations and steps for integrating charitable giving into your estate plan.

Step 1: Define Your Charitable Goals

Before choosing how to give, it is essential to identify your motivations and desired impact. Consider:

• The causes that matter most to you: education, healthcare, community development, animal welfare, the arts, or faith-based initiatives.
• The organizations you wish to support: local nonprofits, national charities, or foundations with a mission that reflects your values.
• The legacy you wish to leave: whether through a one-time contribution, an ongoing fund, or an endowed gift.

Having a clear vision helps guide the structure and legal tools used in your plan.

Step 2: Choose the Appropriate Giving Method

There are several ways to include charitable gifts in your estate plan, each offering unique benefits and considerations.

1. Bequests in a Will or Trust
   A simple and flexible option, a bequest allows you to designate a specific amount, percentage, or asset to a charitable organization. This ensures your gift is distributed according to your instructions after your passing.
2. Charitable Remainder Trust (CRT)
   A CRT provides income to you or designated beneficiaries during your lifetime, with the remaining assets donated to charity at the end of the trust term. This option can offer income tax deductions and help avoid capital gains tax on appreciated assets.
3. Charitable Lead Trust (CLT)
   In contrast to a CRT, a CLT provides income to a charity for a set period, after which the remaining assets are transferred to your beneficiaries. This can help reduce gift and estate taxes while supporting charitable causes during your lifetime.
4. Donor-Advised Fund (DAF)
   A DAF allows you to make a charitable contribution, receive an immediate tax deduction, and then recommend grants to charities over time. It offers flexibility and administrative simplicity.
5. Private Foundations
   For individuals with substantial charitable intentions, establishing a private foundation can create a lasting institution that directs giving for generations. Foundations require ongoing administration and compliance but can offer significant control and legacy potential.

Step 3: Understand the Tax Implications

Charitable giving can provide several tax advantages when structured properly. These may include:

• Income Tax Deductions: For qualified gifts made during your lifetime.
• Estate Tax Reductions: By removing charitable assets from your taxable estate.
• Capital Gains Tax Benefits: Particularly when donating appreciated assets like stocks or real estate.

Proper documentation and legal structure are essential to ensure these benefits are realized. An estate planning attorney can coordinate with your tax advisor to maximize the financial impact of your gift.

Step 4: Ensure Legal and Organizational Compliance

Before finalizing your charitable plan:

• Verify the charity’s legal status: Ensure the organization is a qualified 501(c)(3) under IRS guidelines.
• Confirm the charity’s ability to accept your gift type: Some charities cannot accept real estate or complex assets.
• Review naming conventions: Confirm how you wish to be recognized or remain anonymous.
• Update documents regularly: Reflect changes in charitable preferences, family circumstances, or tax laws.

Failing to confirm these details may result in administrative complications or unintended distribution of assets.

Step 5: Coordinate with Your Professional Advisors

Charitable giving in estate planning involves financial, legal, and personal elements. Collaboration among your attorney, financial planner, and tax advisor ensures your plan is cohesive and efficient.

• Your attorney will draft or update estate planning documents.
• Your financial advisor will help evaluate asset types and timing of gifts.
• Your tax professional will confirm compliance and maximize available deductions.

At O’Connell and Aronowitz, our estate planning team works seamlessly with your advisors to ensure every aspect of your charitable plan aligns with your objectives and current law.

Step 6: Communicate Your Intentions

A well-crafted charitable plan reflects your values and priorities. Communicating your intentions with your loved ones and chosen organizations can prevent confusion and ensure your wishes are respected.

Consider writing a letter of intent outlining your motivations and desired impact. While not legally binding, this letter can provide valuable context and guidance to your family and charitable beneficiaries.

Charitable giving is one of the most meaningful components of a comprehensive estate plan. With thoughtful planning and experienced legal guidance, you can create a legacy that benefits both your loved ones and the causes you care about most.

O’Connell and Aronowitz offers trusted counsel to individuals and families seeking to integrate charitable giving into their estate plans. Our team is dedicated to protecting your legacy, ensuring compliance with complex tax and legal requirements, and honoring your philanthropic vision for years to come.

Contact O’Connell and Aronowitz
 To learn more about how charitable giving can fit into your estate plan, contact our Estate Planning team today.
📞 (518) 462-5601