Charitable Bequests
A charitable bequest is a beneficiary designation or a provision in a will or a trust that allows estate assets to pass to a charitable organization. Charitable bequests can also be made through a beneficiary designation in your retirement plan, life insurance or an annuity.
A charitable bequest can reduce. or eliminate your taxable estate and leave a lasting legacy on organization or cause. Some people give a specific amount to charity, while others give a percentage of their estate. Some leave directives for how the gift is to be used while others do not leave any restrictions or how it can be used. Thoughtful planning will help you gift the right amount, to the right organizations and causes, in the right amount—and possibly help minimize estate taxes.
TYPES OF BEQUESTS
Designing bequests with creative advice from an expert can help you satisfy your charitable goals, as well as ease the administrative burden of passing funds to the charity. Below are a few sample provisions to help you envision how a bequest can be worded and get the process started. RJM Advisors LLC will work with you and your attorney and estate planner to craft the appropriate types and amounts of bequests to fit the philanthropic goals in your estate plan:
When leaving charitable bequests, we always advise having a “savings clause” to any specific bequest. Such a clause helps ensure that your gift will continue to be used according to your wishes in the most efficient way. An example of a savings clause in a will or trust might be as follows:
“If at any time it becomes impossible or impractical for my gift to be used for the above purpose, [charity’s name] shall use my gift for a purpose and in a manner that most closely meets the above purpose.
Summary
Charitable bequests are flexible and easy to update. You can write one into a will with a short paragraph, and if circumstances change you can revoke it very easily in a later will or codicil. A charitable bequest can be a way to create a legacy at an organization that you care about and have supported during your lifetime. Since charitable bequests can be gifted to private foundations or donor-advised funds set up by the donor, it allows the bequest to become an ongoing means of charitable support for the organizations and causes you supported during your lifetime.
Special Tax Note:
Under current federal law, an estate of more than $11.7 million will owe federal tax. In general, there is an unlimited deduction of charitable bequests against the value of an estate, making it a powerful tool for reducing estate tax.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
A charitable bequest can reduce. or eliminate your taxable estate and leave a lasting legacy on organization or cause. Some people give a specific amount to charity, while others give a percentage of their estate. Some leave directives for how the gift is to be used while others do not leave any restrictions or how it can be used. Thoughtful planning will help you gift the right amount, to the right organizations and causes, in the right amount—and possibly help minimize estate taxes.
TYPES OF BEQUESTS
Designing bequests with creative advice from an expert can help you satisfy your charitable goals, as well as ease the administrative burden of passing funds to the charity. Below are a few sample provisions to help you envision how a bequest can be worded and get the process started. RJM Advisors LLC will work with you and your attorney and estate planner to craft the appropriate types and amounts of bequests to fit the philanthropic goals in your estate plan:
- General bequest (under trust): The trustee shall distribute, outright and free of trust, to [charity’s name], a 501(c)(3) organization located at [charity’s address information], [a percentage of trust assets, a specific dollar amount, or remainder of the trust assets] to be used for its general support and charitable purposes without restriction.
- Specific bequest (under will): I give, devise, and bequeath [a specific sum of money, percentage, or specific asset] to [charity’s name], a nonprofit 501(c)(3) charitable organization located at [charity’s address information], to be used for [a specific purpose].
- Demonstrative bequest (under will): I give, devise, and bequeath [a specific sum of money, percentage, or specific asset] from my [type of account] account ending [last four digits of account] at [name of financial institution], to [charity’s name], a nonprofit 501(c)(3) charitable organization located at [charity’s address information].
- Residuary bequest (under will): I give, devise, and bequeath all [or a percentage] of the rest, residue, and remainder of my estate, both real and personal, to [charity’s name], a nonprofit 501(c) (3) charitable organization located at [charity’s address information], to be used for [its general purposes or a specific purpose].
- Contingent bequest: In the event that [name of primary beneficiary] does not survive me, I give, devise, and bequeath all of the rest, residue, and remainder of my estate [or a specific sum of money, asset, or the percentage of the residual estate that would have been given to the primary beneficiary] to [charity’s name], a nonprofit 501(c)(3) charitable organization located at [charity’s address information], to be used for [its general purposes or a specific purpose].
When leaving charitable bequests, we always advise having a “savings clause” to any specific bequest. Such a clause helps ensure that your gift will continue to be used according to your wishes in the most efficient way. An example of a savings clause in a will or trust might be as follows:
“If at any time it becomes impossible or impractical for my gift to be used for the above purpose, [charity’s name] shall use my gift for a purpose and in a manner that most closely meets the above purpose.
Summary
Charitable bequests are flexible and easy to update. You can write one into a will with a short paragraph, and if circumstances change you can revoke it very easily in a later will or codicil. A charitable bequest can be a way to create a legacy at an organization that you care about and have supported during your lifetime. Since charitable bequests can be gifted to private foundations or donor-advised funds set up by the donor, it allows the bequest to become an ongoing means of charitable support for the organizations and causes you supported during your lifetime.
Special Tax Note:
Under current federal law, an estate of more than $11.7 million will owe federal tax. In general, there is an unlimited deduction of charitable bequests against the value of an estate, making it a powerful tool for reducing estate tax.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.