Make a Will, Make a Difference: Charitable Gifting Strategies

August marks National Make-A-Will Month, a timely reminder to reflect not only on how you may want your assets distributed, but also on the lasting impact you can make through thoughtful estate planning. Beyond providing for loved ones, your will can serve as a powerful tool for charitable giving, allowing you to support the causes that matter most – even after your lifetime. 

From simple bequests to more structured financial vehicles like charitable trusts and donor-advised funds, there are numerous ways to weave philanthropy into your legacy. Below are several gifting options that can help you give with purpose and create a lasting imprint for generations to come.

Bequest:

• Donor chooses a specific dollar amount or a portion of their entire estate to be donated to one or more charities upon their passing. The amount is specified in a will, retirement plan, or financial account.
• Benefits include no immediate cost, the ability to retain control over your assets throughout your lifetime, and gifts from your estate may be tax-exempt.

Different Types of Charitable Bequests Include:

• Specific: providing a fixed dollar amount or a particular asset
• Percentage: leaving a specified percentage of your estate’s total value
• Residuary: gifting all or a portion of what remains in your estate after all of your debts, administrative expenses, and other specific bequests have been paid.
• Contingent: a gift which only takes effect if a specific condition occurs, and is mostly used as a backup strategy (for example, if a primary beneficiary does not outlive the donor, a different beneficiary may be named).

Charitable Lead Trust (CLT):

• Irrevocable trust in which donor transfers assets that provide income to one or more charities for a specified period. Once this period ends, remaining assets are either returned to the donor or passed to their designated beneficiaries.
• Benefits of a CLT include the ability to give a significant gift to the charities of your choice, while providing the remaining assets to your heirs at a reduced transfer tax.

Charitable Remainder Trust (CRT):

• Has two sub types: Charitable Remainder Unitrust (CRUT) is based on a percentage amount, and Charitable Remainder Annuity Trust (CRAT) is based on a specific and static dollar amount.
• An irrevocable trust which pays lifetime funds (based on a percentage or a specific dollar amount) to the donor or their designated beneficiaries during a predetermined period. The remaining funds will be transferred to the donor’s chosen charities.
• Benefits of a CRT include having a way to obtain income while possibly becoming eligible for partial tax deduction, and minimizing capital gains on transfers of appreciated assets.

There are many risks and responsibilities individuals may face as trustees. Oppenheimer Trust Company of Delaware can act as Trustee on charitable trusts, providing a disinterested third-party trustee, which also protects the donor.

Charitable Gift Annuity (CGA):

• Contract with a charity which turns a single donation into a lifetime income stream at a fixed rate for the donor. The chosen charity will obtain remaining funds upon the donor’s passing.
• Benefits of a CGA include a fixed lifetime payment, which remains fixed regardless of investment returns.

Donor-Advised Fund (DAF):

• Charitable account which enables the holder to invest and distribute charitable gifts, receive an immediate tax deduction, and recommend grants to charities over time.
• Flexible accounts with no mandatory distribution timeframe, meaning funds can remain in the account for the life of the donor. DAFs are cost effective and accessible to families of varying income levels.

Creating a will provides an opportunity to define the values you wish to pass on. Whether you choose to make a charitable bequest, establish a trust, or open a donor-advised fund, integrating charitable giving into your estate plan can ensure your legacy reflects your passions and priorities. With the flexibility, tax benefits, and long-term impact that these strategies offer, you can turn thoughtful planning today into meaningful change tomorrow. Let this National Make-A-Will Month be your starting point to build a legacy that lives on.

Talk to an Oppenheimer Financial Professional today to see how you can incorporate charitable gifting into your legacy plan. You can find one in your area here.