Charitable Giving and Estate Planning
An estate plan is a statement of what mattered to you, and for many people that includes causes as well as family: a church, an alma mater, an animal shelter, the arts. Building charity into your estate plan lets you make a final gift that may be larger than anything you could give in life, often with meaningful tax benefits for your estate along the way. This guide covers the main ways to give and how they fit into a Washington plan. A Seattle estate planning attorney at Latterell Law can help you match the method to your goals.
Simple Ways to Give
- Bequests in your will or trust. The most common method: a specific dollar amount, a particular asset, a percentage of your estate, or the remainder after family gifts. Bequests cost nothing during life and can be changed anytime. Whether the recipient is a national nonprofit or a small local organization, naming it precisely matters, a point covered in our article on leaving money to a nonprofit when you die.
- Beneficiary designations. Charities can be named as beneficiaries of retirement accounts, life insurance, and payable-on-death accounts. Retirement accounts are often the smartest asset to give: charities receive them free of the income tax that individual heirs would owe, so the charity gets the full value while family receives assets with better tax treatment.
- Donor-advised funds. A donor-advised fund lets you contribute now, take the income tax deduction now, and recommend grants to charities over time. In estate planning, a DAF can be named as a beneficiary, and successor advisors, often your children, can continue the family’s giving, making the fund a simple vehicle for passing on generosity itself.
Charitable Trusts
For larger gifts, charitable trusts let you benefit family and charity from the same assets:
- Charitable remainder trusts (CRTs) pay you or your chosen beneficiaries an income stream for life or a term of years, with the remainder passing to charity. Funding a CRT with highly appreciated assets can defer capital gains, produce a partial deduction, and convert a concentrated holding into diversified income.
- Charitable lead trusts (CLTs) reverse the order: the charity receives payments for a period, and what remains passes to your family, often with reduced transfer tax cost.
These trusts are irrevocable and technical, and they reward careful drafting, which is where working with a Seattle trust lawyer matters. Latterell Law also builds planned giving structures for clients who want charity woven through their plans, described on our Seattle planned giving trusts lawyer page.
The Tax Benefits
Charitable gifts at death are fully deductible from your taxable estate for both federal and Washington estate tax purposes. For Washington families near or above the state’s exclusion amount, that deduction has real power: every dollar left to charity is a dollar removed from the estate the state taxes, which means charitable giving can reduce or even eliminate a Washington estate tax bill while doing good you chose. How the deduction interacts with the state and federal thresholds is covered in our estate tax overview. Lifetime gifts add income tax deductions on top, subject to annual limits.
Tax savings are the sweetener, though, not the point. The plans that work best start with what you want to accomplish and use the tax rules to accomplish more of it.
Practical Tips for Charitable Bequests
- Name the charity exactly, with its legal name and location; many organizations share similar names. Washington-based charities can be verified through the Washington Secretary of State’s Corporations and Charities Division.
- Add a contingency in case the charity no longer exists at your death, either an alternate organization or language letting your personal representative choose a similar one.
- Consider restricted vs. unrestricted gifts. Restrictions ensure your gift funds what you care about, but overly narrow restrictions can make a gift unusable decades later.
- Tell the charity. Organizations can plan better, and often honor donors, when they know a legacy gift is coming, and telling them creates a record of your intent.
Give With a Plan
Whether your goal is a simple bequest to a beloved organization or a trust that provides for family and charity together, Latterell Law can build generosity into your estate plan the right way. Founder Angel M. Latterell has helped Washington families plan thoughtful legacies for more than 20 years. Contact Latterell Law today to schedule a consultation.
