Leaving a Legacy Through Charitable Giving

Not every estate plan is purely about passing wealth to family members. For many people, charitable giving is a meaningful — sometimes central — part of how they want their estate to reflect their values. Done thoughtfully, charitable giving through an estate plan can accomplish two things simultaneously: it can make a real difference for the causes and organizations you care about, and it can significantly reduce the tax burden on your estate.

The Charitable Bequest

The simplest form of charitable giving through an estate plan is the charitable bequest — a provision in your will or revocable trust that directs a specific amount, a percentage of your estate, or a specific asset to a named charity upon your death. Charitable bequests are easy to implement, easy to change, and qualify for an unlimited estate tax charitable deduction. For many people, a bequest is the most appropriate approach. It requires no lifetime sacrifice of assets or income and gives you maximum flexibility to change your mind.

Donor-Advised Funds

A donor-advised fund (DAF) is an account held by a sponsoring organization that allows you to make a charitable contribution, receive an immediate tax deduction, and then direct grants to specific charities over time. You can contribute cash, appreciated securities, or other assets, and the sponsoring organization handles the administration.

“Charitable giving can accomplish two things simultaneously: it can make a real difference for the causes you care about, and it can significantly reduce the tax burden on your estate.”

DAFs are increasingly popular because they’re simple, flexible, and highly tax-efficient — particularly for gifts of appreciated assets, where the donor avoids capital gains tax while still receiving a full fair market value deduction.

Charitable Remainder Trusts

For those who want to benefit both a charity and themselves or family members, a charitable remainder trust (CRT) offers a sophisticated structure. A CRT allows you to transfer appreciated assets to a trust, receive income from the trust for a period of years or for life, take a partial charitable deduction at the time of contribution, and direct the remainder to charity when the trust terminates.

CRTs are particularly effective for donors holding highly appreciated, low-basis assets — real estate, concentrated stock positions — that they’d like to diversify without triggering a large capital gains tax. The trust can sell the assets tax-free and reinvest the proceeds in a diversified portfolio.

Naming Charities as Beneficiaries of Retirement Accounts

One of the most tax-efficient ways to make a charitable gift is to name a qualified charity as the beneficiary of a traditional IRA or other tax-deferred retirement account. Charities pay no income tax on distributions from these accounts, while individual heirs typically must pay income tax on every dollar they receive. By directing tax-deferred retirement assets to charity and leaving other assets — like appreciated securities with a stepped-up basis — to heirs, you can reduce both income and estate taxes while still accomplishing your giving goals.

A Reflection of Values

An estate plan that includes charitable giving isn’t just a tax strategy — it’s a statement about what matters to you and what you want to leave behind. For many families, the conversation about where and why to give is one of the most meaningful parts of the planning process, and it often becomes an opportunity to involve the next generation in thinking about values, stewardship, and legacy.

About John Gunn: John brings over two decades of specialized legal experience to AEGIS Law, with particular depth in probate and trust litigation, estate planning, and fiduciary matters. As a past president of The Missouri Bar, he has demonstrated leadership at the highest levels of the legal profession while maintaining a practice focused on helping individuals and families navigate complex personal and financial transitions.