Charitable giving and your estate plan

For more than a century, Cumberland Youth and Family Services has been transforming lives for those in need, thanks in large part to meaningful generosity of donors who designated our agency in their estate plans. However, more than 70 % of Americans do not have a written will. Estate planning can be considered scary, complex or expensive. But it doesn’t have to be! Estate gifts are often a great way to amplify your ability to donate significantly to causes you are passionate about. Leaving some or all of your estate to charities like Cumberland offers unique benefits donors and provides essential, potentially long-term support to the cause.

We recently sat down with Denton estate planning and probate attorney and friend of Cumberland Caitlyn Ashley to get her perspective on including charitable giving in your estate plan.  

­­Caitlyn is a Denton native and a past Guyer High School Valedictorian. She completed her undergrad at the University of Texas in Austin before earning her Juris Doctor degree from Texas A&M University School of Law in Fort Worth. Caitlyn’s personal experiences with the sudden death of a family member motivated her to shift her law specialty after watching her family navigate her father’s sudden death as a teenager. Now, she is passionate about helping individuals and families navigate estate and probate issues.

Here’s what she had to say as you consider including Cumberland or other charitable causes in your estate.

Can you help us understand the basics of your law specialty?

Estate planning is making a will or trust and organizing deeds and power of attorney documents. Probate is all about helping families navigate after they have lost a loved one. The main goal of estate planning is to make sure my clients are happy with the legacy they leave behind, including the assets they worked hard for. A big part of what I do is meet with my clients to learn about their lives. I learn about their family, goals, wishes, and connection to their community and what they want to do with their assets, and then I help them put that in writing as a will or trust.

What types of assets can be left to charities like Cumberland?

Everyone has different kinds of stuff Things like an IRA, bank accounts, and financial accounts, like life insurance, can be left to individual beneficiaries or charities pretty easily as a bequest. Other assets like your home, land, stocks or mineral rights can be left as well.

What factors would you suggest your clients consider when deciding which charities to consider in their estates?

“The number one thing I want is for my clients to be happy with where they are leaving their assets.  They have worked hard to build their wealth and their legacy. When we are talking about leaving assets to charitable beneficiaries, I really let the client lead the conversation.

What if the asks for your help or wants to lean on others experiences when making that decision?  

From personal experience I feel like donating at a local level has more impact than donating at a national level, and you will see your money go further. To really make sure that your assets are going have the best impact and longest legacy, I think using tools like Charity Navigator and Guidestar to help people get a great understanding about potential charities.

If the idea of leaving your estate appeals to you, there are several different ways to leave your assets to a charity. Here’s an overview.

Charitable Bequest: This one is straightforward. A bequest is a statement in either your will or trust that details what, and the amount, you’d like to leave to the charity. That could be investments, property, autos or other assets. Bequests are just gifts made as part of your will or trust and can be made by anyone and for any amount. However, you’ll want to work with an attorney to accurately convey your wishes to ensure your donations reach the charity and your funds are used for the purpose you desire. Generally, there’s no limit to the number of charitable bequests against the value of an estate (but you need to make sure you designate how your estate is distributed among charities), making them a powerful tool for reducing estate tax.

NAME CHARITY AS A BENEFICIARY: Just as you can name a spouse or other relative as a beneficiary of your IRA, 401(k) or life insurance, you can also designate a charity. To do that, you simply complete a designated beneficiary form for your account. Because your beneficiaries receive those retirement assets at the time of your death, there are a few tax advantages.

Charities don’t pay income tax, so the full amount designated from your retirement accounts will benefit the charity you choose — maximizing your donation. While those assets given to charity will need to be included in the gross value of your estate, it’s considered a tax deductible, charitable contribution that can offset estate taxes for your heirs.

While there are potential tax savings when you leave a retirement account to charity, life insurance proceeds are generally tax free. Therefore, a person could leave their retirement savings to charity while leaving their tax-free life insurance to individuals.

DONOR-ADVISED FUNDS A donor-advised fund is a grant-making account held by a public charity — it’s like an investment account with the sole purpose of donating to charities. You make donations to the fund and the charity agrees to consider the donor’s investment and distribution requests. The donor advised fund handles all the financial and management tasks, which frees you from administrative legwork. You can donate cash, stocks or non-publicly traded assets such as private business interests to be eligible for an immediate tax deduction.

Essentially, this allows you to make a large deductible charitable gift in a single year, without needing to identify all the charitable recipients immediately. In turn, you make grant requests to the charity in that year, or in any subsequent year even if you make no contribution in those years. When you die, assets from your estate can be contributed to the fund and dispersed to charities you’ve designated.