4 ways your estate plan can give to your favorite charity

On Behalf of | Jan 13, 2022 | Estate Planning |

Like many people in the York area, you probably donated money to one or more charities toward the end of 2021. Besides serving a favorite cause and making you feel good, charitable gifts can benefit your income taxes (if they are large enough).

Along with these thoughtful gifts, you can make charitable giving a part of your estate planning. You can make this as big or small of a part of your legacy as you wish. Here are four ways to give part of your estate to charity during or after your lifetime.

Charitable rollover from your IRA

If you are at least 70.5 years old, you can donate up to $100,000 out of your IRA per year using a Qualified Charitable Distribution, or QCD. Money donated through a QCD counts toward any required minimum distribution that must come out of the account for the year.

Donate appreciated stock

As you know, if you sell a stock that has risen in value since you bought it, you must pay capital gains tax on the appreciation. But if you donate the stock to a nonprofit instead, you receive a tax deduction equal to the stock’s full fair market value and pay no capital gains tax. Plus, nonprofits are exempt from the capital gains tax, so the charity of your choice could sell the stock and use the entire proceeds.

Bequest in your will

Of course, you can also leave a bequest in your will specifying which charity you would like to donate to and how much of your estate should be donated. Be careful to specify exactly which organization you want to give to and the amount to give. You can also choose to donate for the charity’s “general purpose,” leaving it up to the organization to decide how to spend it or for a specific purpose (such as a particular project) that you explain in your will.

Make a charity the beneficiary of your retirement accounts

If you like, you can make your favorite charity a beneficiary of your non-Roth IRA retirement account. The benefit to the nonprofit is that it would not have to pay income tax on withdrawals from the account.

A discussion with your estate planning attorney can help you decide the best way to use your legacy to support a cause you care deeply about.