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How can you include charitable giving in your estate plan?

There are several reasons to give to charitable organizations throughout your life, including to contribute to a cause about which you feel passionate, to honor a loved one or to simply do something good. While the best reasons to give are selfless reasons, it may not hurt you to learn that charitable giving can have significant tax implications that equate to a lower tax burden during your lifetime and a reduced estate tax bill upon your death.

Whether you already give to charitable organizations or not, it may be in your and your loved ones’ best interests to take full advantage of the tax benefits of charitable giving. Kiplinger shares a few ways to garner the most tax savings through your estate planning efforts.

Name a charity as a retirement account beneficiary

In typical situations, beneficiaries of retirement accounts must pay income taxes at ordinary rates for any withdrawals they make on the account. A charitable organization, however, can access the funds in its name without tax implications, making it a great way to give large sums of money to your favorite charity.

Sell appreciated stock

If you own stock that has appreciated significantly in value since you purchased it, consider gifting it to a charitable organization of your choice. By giving appreciated stock to a charity, you can avoid the capital gains taxes that would come with selling it instead. Moreover, you can claim a tax deduction that is equivalent to the fair market value of the stock at the time of gifting it. As for how gifting stock can help a charity … The charity can sell the stock without having to pay capital gains taxes on it, as charities are tax exempt.

Make a Qualified Charitable Distribution

If you have an IRA, are older than 70 1/2 and do not need the funds the law requires you to withdraw each year, consider making a Qualified Charitable Distribution of up to $100,000 to the charity or charities of your choice. Doing so benefits the charity in question and allows you to avoid the income taxes that come with the required minimum distribution.

Bequest through your will

One of the simplest ways to benefit your favorite charity and enjoy tax savings is to leave a bequest in your will or trust that specifies an amount you would like to gift. Be sure to identify the specific charity you want to bequeath funds to, as well as the specific purpose of those funds, to prevent any confusion or the misappropriation of your gift in the future.

These are just a few ways you can save on taxes and do good throughout your life and after your death. For more charitable giving strategies, work with an estate planning professional.


Christine S. Cook has earned a reputation in the legal community for her professionalism and among her clients for the care and personal attention she gives to every case.

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