Charitable giving is an admirable way to provide support to worthy causes. Many of our clients, as part of their comprehensive estate plan, have charitable donations bequeathed to organizations close to their hearts. As an added value to supporting organizations you deem worthy, you also have an opportunity to receive a charitable income or estate tax deduction. As with many other elements of estate planning, it’s important that this is done with thought and preparation. When done carefully, effective charitable giving and donations can serve to add other benefits, like providing an inheritance for heirs, decreasing overall tax liability/providing savings on taxes (think capital gains), solidifying a legacy for your family, and even serving as a source of income for you or your beneficiaries.
The first and most crucial step is selecting the charities or causes to which you want to donate. Each charitable organization distributes its donations differently, and you will want to ensure your donation creates the biggest impact for the cause. You likely don’t want your funds to pay employee salaries or administrative costs. Some misleading organizations have persuasive names that indicate they do more than they actually do or support causes they don’t. Here are some things to take into consideration before you select the charities to which you’d like to donate:
- Research the charity before you ever write a check. The Massachusetts’s Attorney General’s office can tell you if a Non-Profit Organization or public charity is a legitimate one. Reach out to the charity and ask them questions. Find out where your money will go, have them reiterate their overall mission, and discover what percentage of your donation actually goes to the causes they support.
- Don’t allow high-pressure tactics to sway your decision. Take the time to carefully and thoughtfully select which charities you want to support. Don’t let fast-talking solicitors force your hand.
- Document, document, document! For all charitable donations, keep detailed records. Document the charity name and address, dates of donations, copies of checks, and receipts. Never ever pay by cash! Submit your donations in a way that provides a solid paper trail.
If charitable giving is part of your estate plan, ensure that your gift isn’t overly restrictive and difficult for the charity to use or access. For example, if your assets are in stocks, consider gifting those stocks directly to the charity in lieu of having them sold and profits donated. Finally, ensure your personal representative or executor understands your wishes when it comes to your estate’s charitable giving and is willing to execute them as you intend.
At KLG Estate Planning & Probate Attorneys, we understand the implications of charitable giving as part of your estate plan. Our team can walk you through your options and ensure that your wishes are carried out, your selected charities receive your donations seamlessly, and that you are aware of tax implications and savings.