It is a common question from many of my clients - how do I leave money for a charity in my will? Just like leaving gifts for others in your life, there's a process to make sure that we get that donation to the right place. But when it comes to charitable donations, there can be an added specificity that you want to make sure you add in case you have specific goals that you'd like accomplished with your gift. It's an important part of your estate plan as a way to leave your legacy to charities or causes that you want to support.
This is also one of the more rewarding parts of your estate plan because you are leaving behind a real "legacy" that you can quantify with a donation. If you've never had an estate plan drafted before, now is a good time to get started and make sure to include any charitable donations that you'd like to make sure are made after you are gone. For others, if you already have a plan in place, it's relatively easy to amend most plans to allow for some type of charitable donation to a cause or institution that you hold near and dear to your heart. If you're not even really sure what specific charity best suits your goals, you can even donate to a donor advised fund to manage your charitable giving.
Leaving Money to a Charity
There are two common methods for leaving money to a charity,
- Specific Bequests
- Bequests from the Residuary Estate
Both of these methods involve a specific provision leaving money to your chosen charity. The difference is where the gift is in the list of distributions under your estate plan. For a specific bequest, this is often a gift that is made near the beginning of your will and will be made to the charity of your choice regardless of which one of your family members survives you. For those who want to make sure that their favorite charity will receive a legacy from their estate plan, this is the normal course they choose.
The second method is to leave a gift to a charity as a residual bequest. In this situation, the charitable gift is given if your other family members and loved ones who you want to inherit your estate are already dead or unable to inherit for some reason. I see this method used when my clients come from small families and don't have many living loved ones who could inherit their estate. In this case, they are choosing a charity to receive whatever is "leftover" in their estate, and if all of their other loved ones are already dead, that amount can be significant.
Hopefully, you can see the different mindsets that come into play when you want to leave money to a charity. You can ensure that a gift will be made with a specific bequest or you can use a charity as the recipient of your residuary estate. A charity will be happy to receive your legacy no matter which method you choose, but it's important that you understand the different ways they can be used in your estate plan.
Taking the First Step
If you've got a specific charity or educational institution in mind, I always recommend that you reach out to their charitable giving department as part of your estate planning process. The charity may have different scholarships or funds earmarked for different causes. If you just generally donate to the charity, then it will normally go to their general fund and can be used for any purpose. But if there is a specific cause that you'd like to make sure your money goes to support, then the charity may have specific language that they want to use to make sure the donation is channeled to the right part of their organization. You can even place restrictions on what the charity can do with your gift.
They may have local chapters or local issues that you particularly connect with and want to make sure that your legacy is funded. So in that case, a quick call to the charitable giving office will likely find that they have pre-drafted language that you can use in your estate plan to make sure your legacy is routed to the right part of the organization. They may also have other guidelines that you should be aware of when you are donating to their charity.
If you'd like to create an estate plan with charitable giving, or if you've already got one and need an update, let's set up a Legal Strategy Session to discuss the next steps for you and your legacy.