How to Leave an Entire Estate to Various Charities

By Heather Frances J.D.

Without an estate plan or will, your state’s laws determine how your assets will be distributed upon your death, typically giving your property to close relatives. However, with the right planning, you can donate your entire estate to charity using tools like a will or trust. A will gives gifts outright, and trusts manage your assets while giving periodic payments to the charities of your choice.

Without an estate plan or will, your state’s laws determine how your assets will be distributed upon your death, typically giving your property to close relatives. However, with the right planning, you can donate your entire estate to charity using tools like a will or trust. A will gives gifts outright, and trusts manage your assets while giving periodic payments to the charities of your choice.

Wills

Your will directs how you want your estate distributed upon your death and nominates a representative for your estate, called an executor. Once appointed by the court, your executor must pay any debts still owing at the time of your death then give your remaining assets to the people or charities you list in your will. Bequests in your will are outright gifts, meaning there are no strings attached. The charity that receives a gift through your will can generally do whatever it wants with it. While this is the simplest way to leave your estate to charity, it does not allow anyone to monitor the way your gifts are used.

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Testamentary Trusts Vs. Living Trusts

In contrast, trusts provide a way for you to control how your gifts are used. When you place money or property inside a trust structure, your trustee manages the assets in accordance with the trust’s purpose, using income from the assets to provide payments to the trust’s beneficiaries. Trusts can be created by your will, called testamentary trusts, or created before your death, called living trusts. If you use a living trust to give gifts to charity during your lifetime, the trust must be irrevocable, meaning you cannot later cancel the trust and take the assets back.

Charitable Trusts

There are two categories of charitable trusts: charitable lead trusts and charitable remainder trusts. A charitable lead trust gives to charity for a certain number of years, giving what is left at the end of that term to a noncharitable beneficiary. For example, you could structure your trust to give $10,000 to your church every year for 20 years, then anything that is left goes to your children. A charitable remainder trust gives payments to noncharitable beneficiaries for a certain number of years or for life with the remaining funds given to a charity after the payment period is over. This could be appropriate for you if you want your funds used to care for a loved one, pet or piece of property before being passed on to a charitable organization.

Disinheriting Your Family

If you plan to leave your entire estate to charity, through your will or a trust, you will be disinheriting any relatives you have, but this may not be possible if you leave a surviving spouse. State laws typically give a percentage of your estate to your spouse, if she survives you, and you cannot give away her share. After your death, she can take the statutory share to which she is entitled, leaving the remainder of your estate to be given to charities as you directed. If you do not specifically state in your will that you intend to disinherit your children, they can claim the disinheritance was accidental and challenge your charitable gifts.

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Difference Between Beneficiary Trust & Marital Trust

References

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