Using Your Assets for Good: Incorporating Charitable Giving Into Your Financial or Estate Plan

Using your assets for good is part of the joy of having enough wealth to make a difference in the lives of others. For many people, dividing up their assets can be an opportunity to think about causes near and dear to them. Sharing their good fortune and leaving a gift for organizations they are passionate about can bring immense joy and satisfaction.

Charitable giving may also provide tax benefits for those who integrate it into their financial and estate planning. For 2026, the federal annual gift tax exclusion is $19,000 per recipient, allowing individuals to make gifts up to that amount without using any portion of their lifetime exemption. The federal estate and gift tax exemption is $15 million per individual, or $30 million for a married couple, subject to applicable rules and elections.

These limits are subject to future legislative changes and inflation adjustments. Individuals should consult their tax and legal advisors regarding current limits and planning opportunities, and how charitable giving strategies may fit within their overall financial and estate plans.

If you plan to integrate charitable giving into your financial plan, you should first identify a cause you are genuinely passionate about and then reputable charities serving that cause. When evaluating organizations, it is important to consider how your donation will be allocated, including program services versus administrative costs. Good resources for researching charities and nonprofits include Charity Navigator and Candid’s GuideStar.

Charitable Giving Through Wills and Trusts

There are many ways to use your assets for good, ranging from simple to complex. Each method of giving has different tax implications, which donors should understand fully before making a gift. Understanding the complexities of charitable gifts and the tax implications of donations can make the allocation all the more meaningful.

Donors may choose to include a gift in their estate plan using one of two methods: a charitable bequest or a contingent bequest.

Charitable Bequest

A charitable bequest is a gift to a nonprofit organization through a will or trust. This allows the donor to remain in control of assets during their lifetime and may help reduce estate taxes. Bequests can be structured as specific dollar amounts or percentages of an estate’s value. Residual bequests transfer remaining assets after all other provisions of the estate plan have been satisfied.

Contingent Bequest

Contingent bequests offer flexibility if the primary beneficiary of the estate predeceases the testator or if the named beneficiaries disclaim their inheritance. In these situations, assets may instead pass to the designated charitable organization.

Either bequest can be effective for anyone wishing to leave a one-time gift through their estate plan.

Split the Giving and Potentially Increase the Benefits

Married couples looking to maximize certain charitable planning opportunities may consider split gift strategies. Charitable gift annuities and charitable remainder trusts are two commonly used examples.

Charitable Gift Annuities

A charitable gift annuity, sometimes referred to as a ‘split gift,’ allows a donor to transfer assets to a charitable organization. In exchange, the charity agrees to make fixed payments to one or two beneficiaries for life. Depending on the circumstances, donors may receive a charitable income tax deduction, and a portion of the payments may receive favorable tax treatment.

Charitable Remainder Trusts

A charitable remainder trust is another type of split gift strategy. These trusts are often used with highly appreciated assets and may provide a current charitable income tax deduction. They may also offer flexibility when transferring appreciated property while providing income to the donor or other beneficiaries during life. Upon the donor’s death, the remaining trust assets pass to the designated charitable organization.

Large Scale Charitable Giving: Using Your Assets in a Bigger Way

Donor Advised Fund (DAF)

A donor-advised fund (DAF) allows donors to make charitable contributions to an account maintained by a sponsoring public charity. Donors may contribute assets, receive a tax deduction if eligible, and recommend grants to qualified charitable organizations over time.

These funds can be useful for individuals who support multiple charities or wish to leave assets to various organizations, as they can simplify charitable administration and recordkeeping.

Another benefit of a DAF is the flexibility to make a charitable contribution now and choose the recipient later. If you want to support a charitable cause but have not yet selected a specific organization, a DAF can allow you to make the contribution now and recommend grants in the future.

Family Foundation

A family foundation may be a suitable alternative for those seeking to make a significant impact on a particular charitable goal. Family foundations can provide charitable and tax planning opportunities, but come with complex rules, ongoing administrative responsibilities, and additional costs. They may also require meaningful involvement from family members to guide and govern the foundation over time.

Leverage Your Charitable Giving with Life Insurance

As we continue to save and accumulate assets over time, we may no longer need a life insurance policy for its original purpose. In certain situations, this can create an opportunity to transfer the policy to a qualified charitable organization.

Depending on the circumstances, donors may receive tax benefits related to the transfer and future premium payments. Upon the insured’s death, the charity may receive the policy’s death benefit. Individuals considering this strategy should consult their financial, tax, and legal advisors to understand the potential benefits, limitations, and suitability of this approach.

Communication and Expert Advice Make Charitable Giving Easier

Because charitable giving decisions can affect family finances and legacy goals, it is important to discuss your plans with family members at the outset. These conversations can help ensure charitable objectives align with broader family goals and expectations.

Following those discussions, meetings with your financial advisor, tax professional, and attorney can be important next steps, particularly if you plan to pursue more complex strategies such as charitable trusts or family foundations.

Giving back to one’s community is a responsibility many people feel compelled to fulfill. Understanding the options, benefits, and potential drawbacks of each charitable giving vehicle can help donors create a meaningful impact while supporting the causes that matter most to them.

[Editors’ Note: This is an updated version of an article originally published on December 20, 2017 and updated November 3, 2022 and November 1, 2024.]

©2026. DailyDAC^TM, LLC d/b/a/ Financial Poise^TM. This article is subject to the disclaimers found here.