Make Uncle Sam the Only Loser When Giving to Charity

When it comes to estate planning, most people focus on making sure their family is taken care of and that the government stays out of their business as much as possible. But there’s another important piece to the puzzle—using your estate plan to give back to the causes you care about.

Whether it's your church, a local animal shelter, or a nonprofit you've supported for years, there are several ways to make a lasting impact. Some are simple, others more advanced—but all are worth considering.

Let’s break down eight of the most common (and effective) ways to donate to charity through your estate plan—in plain English.

1. Leave a Gift in Your Will or Trust

This one’s the classic. You name a charity in your will or revocable trust, and they receive a gift after you pass. You can leave a specific dollar amount (“$10,000 to XYZ Charity”) or a percentage of your estate (“10% of my total estate”).

You can also make it contingent—so the charity receives the gift only if certain other people have passed. For example, if your spouse and children are gone, the remaining estate could go to charity.

And yes, people get creative. One client left her house to a pet shelter—with the condition that her cats could live there until they passed. The shelter got a valuable asset, and the cats got to live out their lives in comfort. Everybody wins.

2. Charitable Gift Annuity

This is a great strategy if you want to give to charity—but also want a steady stream of income.

You make a gift to a nonprofit that offers charitable gift annuities. They use part of that gift to fund an annuity that pays you (or someone else) a fixed income for life. When you pass, the remainder goes to the charity.

Bonus: You may get a sizable tax deduction up front. It’s a smart way to generate income while still doing good.

3. Donor-Advised Fund (DAF)

Think of a donor-advised fund as your personal charitable giving account. You contribute to it, take the tax deduction right away, and then recommend grants to your favorite charities over time.

You can also name charitable beneficiaries to receive what’s left in the fund when you pass. It gives you flexibility and control during your lifetime, plus a clear plan for when you’re gone.

4. Qualified Charitable Distribution (QCD) from an IRA

If you’re over 73 and taking required minimum distributions (RMDs) from your IRA (or just 70.5 in general), this is a powerful tool. A QCD allows you to send up to $100,000 per year directly from your IRA to a qualified charity. That money doesn’t count as taxable income.

Not only does it fulfill your RMD obligation, but it also helps lower your overall taxable income—which can affect Medicare premiums and taxes on Social Security. It’s a clean and efficient way to give.

5. Name a Charity as Life Insurance Beneficiary

You can name a charity as the beneficiary of an existing life insurance policy—or take out a new policy specifically for charitable giving.

Life insurance can be a cost-effective way to make a large donation. You pay relatively low premiums, and the charity receives a much larger death benefit.

Got a policy you no longer need? You can donate the policy itself to the charity. They can maintain it or cash it in, depending on the situation. Either way, your gift goes a long way.

6. Donate Appreciated Assets (Stock, Real Estate, etc.)

If you have investments or property that have gone up significantly in value, donating them directly to charity can save you a lot on taxes.

When done properly, you avoid paying capital gains tax—and still get a charitable deduction for the full fair market value.

Example: You want to give $10,000 to a nonprofit. Instead of writing a check, you donate $10,000 worth of stock you bought years ago for $1,000. You avoid the tax on the $9,000 gain and still get the full deduction. Smart move.

7. Charitable Remainder Trust (CRT)

This one’s more advanced, but incredibly powerful.

You place an appreciated asset—like real estate or stock—into a special trust. The trust sells the asset (avoiding capital gains tax), pays you income for a set number of years or for life, and then gives the remainder to charity.

You get an income stream, a tax deduction, and peace of mind knowing the asset won’t get eaten up by taxes.

Bonus strategy: Use some of the income to fund a life insurance policy for your heirs—so they still receive a tax-free inheritance even though the asset went to charity.

8. Testamentary Charitable Remainder Trust Funded by an IRA

This one is getting a lot more attention—and for good reason.

If your kids inherit a traditional IRA today, they generally have to empty the account within 10 years. That means more income, more taxes, and less of the IRA left for them.

With a testamentary charitable remainder trust, your IRA funds the trust after you pass. The trust pays your heirs income over a longer period (even their lifetime), and the remainder goes to charity.

You reduce taxes, support a cause you care about, and stretch the benefit for your family.

Wrapping It Up

Charitable giving isn’t just about generosity—it’s smart planning. These eight techniques give you a wide range of options to support your favorite causes, reduce taxes, and even provide for your family.

The right strategy depends on your goals, your assets, and your tax situation. Talk to a qualified estate planning attorney and financial advisor to explore what’s best for you.

And if you want help sorting through the options in plain English—well, you know where to find us.