Charitable Giving Through Your Estate Plan: What to Know

For many Minnesotans, giving back to their community is more than just a one-time donation—it's a legacy they want to leave behind. If you’ve supported a cause during your life, your estate plan offers a powerful way to continue that support even after you're gone. While you may be thinking that it must be a "charity" that receives a piece of your legacy, there are actually a variety of different ways that you can craft that legacy beyond traditional charities.

Including charitable giving in your estate plan isn’t just about generosity. It’s also a strategic way to reduce estate taxes, support your values, and make a lasting impact. Whether you want to donate to your church, alma mater, or a local nonprofit, there are multiple options to make it happen.

Why You Should Include Charitable Giving in Your Estate Plan

Your reasons for including charitable giving are your own, they are personal to you and you can craft them as you would like. As you do so, consider some of the advantages they can offer, including:

Tax benefits: Reduce or eliminate estate taxes for larger estates.
A lasting legacy: Align your wealth with your values and support causes that matter most to you.
Flexibility: You can change your charitable beneficiaries during your lifetime if your goals evolve.
Family values: Teach future generations the importance of philanthropy.

In some cases, charitable giving can help smooth over family tensions. For example, if your children don't need a large inheritance, a charitable gift can help avoid perceived favoritism while supporting a worthy cause.

How to Include Charitable Giving in Your Estate Plan

You can choose to structure your giving in a variety of ways. Five of the most common ways that my clients will include it in their planning:

Option 1: Bequests in Your Will or Trust

The simplest method is to name a charity in your will or revocable living trust. This is the most common option that my clients choose and it allows you to:

Leave a specific dollar amount
Designate a percentage of your estate
Gift a particular asset (like real estate, stocks, or artwork)

Example: “I give 10% of my estate to Second Harvest Heartland” or “I leave $25,000 to the Animal Humane Society.”

This option is easy to set up and flexible, since you can amend your will or trust during your lifetime.

Option 2: Beneficiary Designations

Some assets—like retirement accounts, life insurance policies, and payable-on-death (POD) accounts—allow you to name beneficiaries. This is a powerful method because when you use a beneficiary designation, it provides for a direct transfer to that beneficiary upon your death. It does not get passed through your will or trust (unless the trust is the beneficiary). And while you are alive, you can always make changes to your beneficiary designations, allowing for flexibility if you change your mind.

Naming a charitable organization as a beneficiary of your IRA or 401(k) can be especially tax-efficient. Since charities are tax-exempt, they can receive 100% of the value—while individuals would pay income tax on withdrawals.

Option 3: Charitable Remainder Trusts (CRTs)

Now we're getting to some more involved and complicated estate planning options. Using a CRT, you can:

Provide income to yourself or a loved one for a set period
Donate the remainder to charity after that period ends

This type of trust provides an immediate charitable income tax deduction, potential capital gains tax avoidance, and estate tax benefits. CRTs can be complex, but they’re powerful tools for high-net-worth individuals or those with appreciated assets like real estate or stock.

Option 4: Charitable Lead Trusts (CLTs)

This has the same idea as the CRT, but in reverse. Utilizing one of these trusts,

The charity receives income for a set number of years
The remaining assets then go to your heirs

These are often used to reduce estate or gift taxes and provide for both philanthropic goals and future family wealth transfer.

Option 5: Donor-Advised Funds (DAFs)

A DAF lets you make a tax-deductible donation now, invest it, and recommend grants to your favorite charities over time. You can also name a successor advisor (like your child) to continue the giving tradition after your death. While not a direct part of your estate plan, DAFs can work in tandem with your will or trust by coordinating your legacy giving.

Minnesota-Specific Options

If you live in Minnesota, your estate may be subject to the Minnesota estate tax, which kicks in at $3 million (as of 2025). Charitable gifts can help reduce your taxable estate below that threshold.

Also, keep in mind that not all charities are created equal. If you’re donating to a smaller or local nonprofit, confirm that they’re properly registered and in good standing with the Minnesota Attorney General’s Office. You can search the nonprofit’s status at https://www.ag.state.mn.us.

Common Charitable Giving Mistakes

Charitable estate planning is rewarding, but also comes with potential pitfalls:

Naming an Unqualified Charity: Not all organizations qualify for tax-exempt status. Always verify that your chosen charity is a 501(c)(3) to ensure your estate receives the intended tax benefits.
Forgetting to Tell Your Executor or Trustee: Make sure your executor or trustee knows your intentions—and how to reach the organization. Include contact information and any restrictions or directions for the gift.
Failing to Update Your Plan: Your philanthropic goals may change, or your preferred charity might merge or dissolve. Periodically review and update your estate plan so your wishes remain current.

How to Get Started

If you're ready to get started, here are some simple steps you can take as part of the estate planning process:

List your charitable priorities. What causes are most meaningful to you?
Talk to your estate planning attorney. This is an attorney's blog, you knew this advice was coming. We can help determine the most effective strategies based on your assets and goals.
Loop in your tax advisor. They can help coordinate income tax and estate tax implications.
Communicate with your family. Help them understand why you’ve chosen to include charitable giving—and how it reflects your values.

Whether your estate is modest or complex, charitable giving is a powerful way to make a difference while also planning wisely. It’s not just about giving money—it’s about aligning your values with your legacy.

Need Help With Your Charitable Giving?

If you need help with your beneficiary designations or other charitable giving tactics, let's schedule a Legal Strategy Session online or by calling my Edina, Minnesota office at (612) 294-6982 or my New York City office at (646) 847-3560. My office will be happy to find a convenient time for us to have a phone call to review the best options and next steps for you to work with an estate planning attorney.