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Leaving Money To Charity In Your Estate Plan

Posted by Aubrey Carew Sizer | Sep 12, 2022

Your estate plan guides your legacy, which often includes distributing your wealth to family members and loved ones. However, your estate plan can extend well beyond this limited scope to include gifts to charity. Charitable giving can be a very rewarding component of your estate plan. The experienced Virginia estate planning attorneys at The Law Office of Aubrey Carew Sizer PLLC can help to ensure that your estate plan clearly addresses all your wishes as they relate to honoring those most important to you and giving back in a manner you find meaningful. You can get started with a confidential consultation by calling (571-403-2619).

Legacy Giving

Legacy giving or charitable giving allows you to leave  a monetary donation or something of value to a nonprofit organization or charity that is close to your heart through your Virginia Last Will and Testament. Not only does this benefit the charity you choose, but it can also prove beneficial to your estate overall. In fact, leaving money to charity can lead to all the following benefits:

  • Reducing the tax implications for your estate
  • Allowing you the opportunity to provide the charitable organization of your choice with a more considerable donation (rather than contributing small amounts during your lifetime that are less beneficial to the charity in question and that can affect your day-to-day budget)
  • Making your financial legacy more personally meaningful to you

The larger gifts that nonprofits receive through estate planning provide them with funds they can rely on and maximize budgetarily, rather than the irregular, smaller contributions that are often earmarked for monthly administrative expenses.

A Key Benefit to Charitable Giving: A Reduction in Your Estate Taxes

For those with large estates, significant estate taxes may apply. While the State of Virginia no longer imposes an estate or inheritance tax, the federal government does. Leaving money to a nonprofit organization that is important to you can help you reduce the associated federal tax implications. Federal tax is calculated prior to your loved ones receiving the assets you leave for them, which means that these taxes can significantly reduce the portion of your estate that flows to your heirs.

Planned giving in the form of leaving money to charity generally qualifies as a tax deduction, which can reduce your tax expenses and potentially decrease the value of your estate below the applicable federal limit at which estate taxes apply. However, for such donations to qualify as tax deductions, you must specify in your will or trust the charity you want to make a gift to, as well as:

  • The exact dollar amount of your contribution
  • A specific percentage of either your estate or an element of your estate
  • A specific item or items of value

Discussing your charitable giving with the dedicated Virginia estate planning attorneys at The Law Office of Aubrey Carew Sizer PLLC can help to ensure that your legacy is addressed in accordance with your wishes.

What Can You Donate to Charity?

While you can leave a wide range of charitable gifts in your will, it is important to confer with the charity of your choice regarding the kinds of gifts it is open to receiving. For example, while some nonprofit organizations are prepared to accepts gifts in the form of valuable items, others prefer to receive monetary donations. The kinds of assets that are commonly gifted to charities include:

  • Real estate holdings
  • Jewelry, art, antiques, watches, collections, and other valuable belongings that are commonly sold at auction
  • Stocks and bonds and other financial instruments
  • Savings accounts
  • Retirement accounts
  • Personal belongings, such as home furnishings and clothing
  • Cars, motorcycles, RVs, boats, and other vehicles

Even if the charity to whom you bequeath valuables cannot use the item itself, a third party may be able to  auction it off on the charity's behalf with the sale's proceeds going to your chosen charity. Other options include giving a specific amount of cash or a specific percentage of all the rest, residue, and remainder of your estate (that portion of your overall estate that is not addressed by assigned inheritances, debts, expenses, or taxes).

The Four Classifications of Charitable Giving

Charitable giving falls into the following four basic categories.

General Gifts: Leaving Money to Charity

The most straightforward mechanism for charitable giving is simply allocating a specific amount for the charity.. This is classified as a general gift because it is culled from the general value of your estate, rather than from a specific source included in your estate. 

Specific Gifts: Leaving an Item of Value to Charity

When you leave a specific item of value, such as a piece of jewelry, an artwork, or a financial account, the item is classified as a specific gift.

Demonstrative Gifts

Demonstrative gifts are a hybrid of both general and specific gifts. Demonstrative gifts are typically financial gifts (or general gifts) that are culled from a specific source within your estate. An example is leaving a specific amount from the sale of a real estate property to a charity of your choosing.

Residual Gifts

Residual gifts refer to leaving whatever remains in your estate to the charity you designate after the inheritances, taxes, and expenses are addressed. These residual gifts would represent anything you have not specifically left to others or that does not go to final expenses or taxes. These residual gifts will be donated to your charity of choice.

Discuss Your Charitable Giving with an Experienced Virginia Estate Planning Attorney

Leaving money to charity can play an important and rewarding part in your overall estate planning, but maximizing the potential of your charitable giving is paramount. The trusted Virginia estate planning attorneys at The Law Office of Aubrey Carew Sizer PLLC take great pride in their commitment to helping clients like you give back according to their own wishes, while skillfully guiding their overall estate planning needs. We are here for you, too. You can schedule a confidential consultation to discuss your wishes regarding charitable giving by calling us at 571-403-2619.

About the Author

Aubrey Carew Sizer

Aubrey Carew Sizer is the Principal Attorney of The Law Office of Aubrey Carew Sizer PLLC, a Northern Virginia law firm providing representation for Wills, Trusts, and Estate Planning, Long-Term Care Planning, Guardianship and Conservatorship, Special Needs Planning for the Disabled, and Probate, Estate and Trust Administration.

Services

The Law Office of Aubrey Carew Sizer PLLC provides customized and affordable estate planning (including wills, living trusts, powers of attorney, and advance medical directives); elder law services (including long-term care planning, special needs planning for the disabled, and guardianships and conservatorships); probate, estate and trust administration (including advising executors and administrators of estates about post-mortem planning and the local probate process in Virginia), as well as general aging and disability advice in Northern Virginia, including but not limited to Arlington, Alexandria, Ashburn, Bristow, Burke, Centreville, Chantilly, Gainesville, Fairfax, Falls Church, Haymarket, Herndon, Leesburg, Manassas, Manassas Park, Reston, Springfield, Sterling, and throughout Loudoun, Prince William, and Fairfax counties.

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