Incorporating Charitable Giving into Your Estate Plan

By Greg Jones

About 70-80% of people give to charitable causes during their lifetime; however, only 7-8% include a provision for charity in their estate plans. Why is this? Frankly, I don’t believe the idea of supporting charity is often prompted by the attorney during the estate planning process. Lawyers generally have the goal of helping their client pass “as much as possible” to the next generation, and while there are tax incentives associated with making gifts to qualifying charities, you are almost never better off financially after making a gift to charity – the bite against your assets has just been lessened.

Many clients do want to maximize the amount given to children and grandchildren, but if you have supported a charitable cause during your life, don’t hesitate to tell your estate planning attorney that you want to provide for it in the event of your death, as well.

One simple way to give. For those who do want to make an estate gift to a charity, they often initially request just putting a flat dollar figure in their Last Will and Testament. STOP! There may be a better way. First, if you ever want to change this gift, you will have to go through the legal formalities & expense of creating and executing a codicil (or amendment) to your Will. This will require drafting the codicil, lining up witnesses and a notary, and signing the codicil in the same manner prescribed by Missouri law for signing a Will. The second reason to consider an alternative to making a charitable bequest in your Will is that there may a more tax-efficient way to do so.

Retirement assets are some of the most heavily-taxed assets when they are passed to the next generation. Consider, instead, naming your favored tax-exempt charity as the beneficiary of part or all of your retirement assets. Since these organizations will not pay taxes on the receipt of assets, they get the full value of your gift. In addition, if you have a change of heart about the charity, or if you wish to leave more or less to it, it is usually much easier to simply change the beneficiary designation on these retirement assets than it is to amend your Will.

If you would like a complimentary consultation on making charitable gifts in your estate planning – or on your estate planning, in general – please call one of the attorneys at Jones & Watkins at (573) 234-1130 or email us through our Contact Form.