The best way to leave things to your favorite charity or non-profit organization after you die is to make sure you have an estate plan in place. A gift of money, assets or property in an estate plan is called Planned Giving and many organizations depend upon these planned gifts to ensure that they have the funds to continue their mission.

Planned Giving is a meaningful way for you to leave a thoughtful legacy and help a cause that you care about.  But in order to give a Planned Gift you must do so with a Comprehensive estate plan. This is the only way an organization or charity is able to take legal possession of the bequest (gift you leave in your estate plan). If you do not have a plan, the default Washington State plan, called intestate, will give all of your property to your spouse, children, or surviving family members.  So it is essential, when giving to an entity (a non-profit or a charity) to have an estate plan. So without further ado, let’s dive into this important topic.

 

What Is Planned Giving?

Planned Giving, also known as legacy giving, involves making a commitment to contribute to a church, non-profit or charitable organization through your estate plan. Unlike donations you give in response to a call to action, planned gifts are arranged now and distributed upon the donor’s death. These gifts can take many forms, including bequests, charitable trusts, life insurance policies, retirement assets, and more.

When I worked at Seattle Children’s planned giving was an essential part of the Seattle Children’s Foundation budget.  Individuals choosing to donate to the hospital or research institute in their Last Will and Testament allowed for the hospital to continue providing care to families in need, and funded vital research facilities to support finding cures for childhood diseases (something that is hugely underfunded in scientific research today).  Other organizations, like KEXP and KUOW public radio stations, and public libraries LOVE planned gifts as well so they can continue their mission.

Public serving organizations go out of their way to educate individuals about how to create estate plans, as this provides the opportunity for people to donate. Education in this area is a win-win, because it educates the public about the importance of creating an estate plan.  Just this last December I did a live webinar called Face the Music with KEXP where I shared the importance of estate planning with individuals and families.

You can access that webinar here.  

The point of my presentation was not to make sure that more people donate to KEXP or public radio, but to provide the message and education. That message being – The only way you get to choose where your property goes when you die is to create a comprehensive estate plan. Further, if you are a parent of minor children, you must create a comprehensive estate plan and guardianship plan to ensure your children are taken care of by the people you choose if something happens to you.

Personally, I have included KEXP, REST (Real Escape from the Sex Trade) and Seattle Children’s in my estate plan because I believe in the work that all of these organizations do. Ultimately though, who you give to and how is your choice – but at the risk of sounding like a broken record, the only way you can make that choice is to work with an experienced estate planning attorney to create a comprehensive estate plan for yourself and your family.  Otherwise, the state has already decided how your property will be distributed via statute and Probate Court.

 

Besides Feeling Good What Are the Benefits of Planned Giving?

The biggest reason to give is because it makes you feel good.  You get to contribute to a cause that you believe in.  But to be completely transparent a lot of gifts to charities happens as a way to avoid ESTATE TAXES. If you own over $2.19 million in cash or property assets in Washington State you have an estate tax issue and your estate could be paying 10% or more of your estate to the State of Washington.  In this case, wouldn’t you rather give money to an organization you care about instead of the state?  Working with an experienced estate planning attorney to set up an appropriate Charitable Trust or Charitable Gift will assist you in accomplishing this.  The State of Washington has over $1 billion dollars in the department of lost property already as a result of individuals not creating estate plans. The state gets to collect the interest off this money on top of the estate taxes.  So Washington State is covered.  Choose to create an estate plan while you are alive to ensure that your property goes where you want it to go after you are gone.

 

Avoiding Estate Tax When You Own Assets Over $2.19 Million

Washington State offers a variety of ways to facilitate Planned Giving. The appropriate option depends on your assets, family situation, and philanthropic goals – which you can determine working with your estate planning attorney and financial advisor.

Below are five different ways you can do this, especially if you have assets over $2.19 million. If you do not have assets to that level yet, your job is easy.  If you are right on the border, I can help you actually get below the estate tax threshold with specific strategies – so set up a call with me.

1. Bequests in a Will or Revocable Living Trust

One of the easiest and most popular forms of planned giving is including a charitable bequest in your will or revocable living trust. You can designate a specific dollar amount, a percentage of your estate, or a particular asset to be given to a nonprofit.

Bequests are flexible and can be modified at any time during your life, making them ideal for donors who want to maintain control over their estate.

2. Beneficiary Designations

You can name a charitable organization as a beneficiary on financial accounts, life insurance policies, or retirement plans. These designations are simple to set up and do not require changes to your will. Some Life Insurance companies even do matching in their policies. National Life Group will match your gift noted in your life insurance up to $30,000.  So your life insurance has twice the power to support you, your family and organizations you care about.

Assets Commonly Used:

• IRAs and 401(k)s
• Life insurance policies
• Bank and investment accounts with payable-on-death (POD) or transfer-on-death (TOD) designations

Because retirement assets are often subject to income taxes when inherited by individuals, designating a nonprofit as the beneficiary can provide significant tax advantages.

3. Charitable Remainder Trusts (CRTs)

A Charitable Remainder Trust allows you to:

• Receive income for life or a term of years.
• Provide the remainder of the trust to a charity after your death or the end of the trust term.

There are two main types:

• CRAT (Charitable Remainder Annuity Trust): Pays a fixed amount annually.
• CRUT (Charitable Remainder Unitrust): Pays a fixed percentage of the trust’s value annually.

These trusts can provide lifetime income, reduce current income taxes, and eliminate capital gains taxes on appreciated assets.

4. Charitable Lead Trusts (CLTs)

A Charitable Lead Trust works in the opposite manner of a CRT:

• The charity receives income for a term of years.
• The remainder goes to your heirs or other beneficiaries.

CLTs can be a powerful tool for reducing estate and gift taxes while supporting a cause you love.

5. Donor-Advised Funds (DAFs)

While not technically part of your estate plan, Donor-Advised Funds allow you to make a charitable contribution, receive an immediate tax benefit, and recommend grants to nonprofits over time.

DAFs can also be included in your estate plan by naming them as beneficiaries or allocating funds in your will or trust.

 

Steps to Get Started

If you are considering incorporating planned giving into your estate plan, here are some steps to guide you:

Identify Your Goals: What causes matter most to you? What type of legacy do you want to leave?

Inventory Your Assets: Understand what you own and how those assets are titled.

Choose the Right Tool: Work with an experienced estate planning attorney and a holistic financial advisor to determine which planned giving strategies align with your goals.

Draft or Update Legal Documents: Make sure your will, trust, and beneficiary designations reflect your charitable intentions.

Inform the Charity: Let the organization know about your gift!  So they can plan on it. Many have legacy societies to honor planned givers including perks you can enjoy while you are alive.

Review Your Plan Regularly: Life changes, and so should your estate plan. Revisit it every few years or after major life events.

Choose an experienced estate planning attorney who helps you do all of this! 🙂

 

It is Never Too Early To Make a Planned Gift

If you want to make a difference beyond your lifetime it is essential to create a comprehensive estate plan. Even if you do not have a large bequest to leave – it will be impossible to leave that gift if you do not plan while you are able.  If you do have a large gift to leave, and live in Washington State, it is essential that you start the planning process early, so we can ensure that you do not leave the State a huge estate tax gift instead of your family and the organizations you care about.

Do not delay and book a call using the link below to discuss this and more with an experienced estate planning attorney who understands both the law and the values behind your giving.