Many Californians want their estate plan to do more than just pass down property or protect loved ones; they also want to make a difference in their community or support causes that mattered to them during their lifetime.
Best Coast Estate Law, P.C. regularly works with clients who want their legacy to extend beyond their family. Charitable giving is one of the most powerful ways to ensure your values live on while also providing potential tax benefits for your heirs.
Can You Charitably Give Through Your Estate?
At its core, charitable giving through your estate means using your estate plan to support nonprofits, foundations, or other charitable organizations after you pass away. It can mean leaving a gift in your will, to setting up a trust specifically designed for philanthropy.
It’s not just for the ultra-wealthy. Many Californians with modest estates include charitable remainder trusts, charitable bequests, charitable lead trusts, or donor advised funds as a way of giving back. And these gifts can make a significant impact.
4 Ways to Give Charitable Gifts Through Your Estate
There are several common strategies for charitable giving through your estate, each with its own benefits:
- Gifts and Charitable Bequests in Your Will or Trust
The simplest way to leave a legacy is by including a charitable gift in your will or living trust. You can leave a specific dollar amount, a percentage of your estate, or even particular assets, such as stock, real estate, or other property at fair market value. With a bequest, you are directing a gift to a nonprofit which is flexible, easy to update, and can significantly reduce estate taxes for larger estates. - Charitable Remainder Trusts (CRTs)
A CRT allows you to provide income to yourself or your loved ones during your lifetime, with the remaining assets going to a charity when the trust ends. This approach can offer income tax deductions and help reduce estate taxes. - Charitable Lead Trusts (CLTs)
The reverse of a CRT, this type of trust provides income to a charity for a set period, after which the remaining assets go to your heirs. CLTs can be a smart tool for reducing gift and estate taxes. - Beneficiary Designations
You can name a charity as a beneficiary of retirement accounts, life insurance policy, or other financial assets. This is often one of the easiest ways to make a charitable contribution through your estate plan.
Why Charitable Giving Through Your Estate Plan Matters
Californians are known for supporting causes that align with their values—whether that’s education, the arts, environmental conservation, or social justice. By incorporating charitable giving into your estate plan, you:
- Support the organizations and missions that matter most to you.
- Teach your children and grandchildren the importance of generosity.
- Potentially reduce estate taxes with charitable deductions, which means more of your assets go where you want them to go.
Tax Benefits of Charitable Giving
While supporting a cause is often the primary motivation, charitable giving can also bring tax advantages. In California, large estates may be subject to federal estate taxes. Gifts to qualified charitable organizations can reduce your taxable estate value and yield estate tax deduction, leaving more for your beneficiaries while also helping a charity.
Additionally, if you use strategies like charitable trusts, you may see benefits towards income taxes. During your lifetime you can see immediate income tax deduction. Qualified contributions reduce your adjusted gross income (AGI) because they are taken as an itemized deduction when you file federal income taxes.
At death, your adjusted gross income wouldn’t be reduced because you are no longer filing income taxes.
Mistakes to Avoid When Charitably Giving
When incorporating charitable gifts, it’s important to avoid these pitfalls:
- Not being specific – Naming a charity clearly and accurately ensures your gift goes where intended. Many organizations have similar names.
- Failing to update your plan – If a charity closes or merges, your gift could be delayed or lost without updates.
- Overlooking tax-efficient options – Leaving retirement accounts to charity can often be more tax-efficient than leaving them to family, since charities don’t pay income tax on distributions.
Estate Lawyers Help Californians Give Back
At Best Coast Estate Law, P.C., we work with clients across California who want their estate plan to reflect both their personal and philanthropic goals. Whether you’re considering a simple gift in your will or exploring charitable trusts, we’ll walk you through the options and help you design a plan that maximizes both impact and efficiency.
Charitable giving through your estate isn’t just about dollars and cents—it’s about leaving a legacy that reflects who you are and what you care about.
Moving Forward With Charitable Giving
If you’ve been thinking about including charitable giving through your estate, there’s no better time to start planning. The right structure ensures your wishes are carried out smoothly, minimizes estate and income taxes, and creates a meaningful legacy for the causes closest to your heart.
At Best Coast Estate Law, P.C., we’re here to help Californians craft thoughtful, personalized estate plans that protect loved ones while giving back to the community. If charitable giving is part of your vision, we’d love to help you make it a reality.
