A charitable bequest is a gift given as part of a will or trust. Bequests can be given by anyone, to anyone or any party. They are as simple as a monetary donation. Bequests are often attached with conditions on how an asset is used.
When authoring a will, we want to ensure those close to us are taken care of. That includes causes and organizations meaningful to us. Making a bequest to charity can have many benefits. It can also solidify your legacy in history.
Here are nine benefits of making a charitable bequest:
1. You make a bequest to a charity you care about.
As a part of the legacy you leave to begin, a bequest to charity can help further the growth of a cause you’re passionate about. It can be making a bequest to charity in a church. It can also be a charity raising funds for research, an environmental cause, or a social activist group.
A bequest helps to continue work and advocacy that you have a passion for. The bequest will benefit those you hold close to your heart.
2. Charitable bequests come with tax benefits for estate.
A charitable bequest is a move that many people choose to make because it lifts a sometimes-significant tax burden payable upon death. An estate can claim gifts in the year of death equivalent to 100 percent of your net income in that year. It also includes the year preceding death or for up to 36 months after your death.
This ensures your finances aren’t simply collected by government sources. The money is also directed towards charities that may put your funds to better use.
3. Life insurance bequests offer tax benefits.
When you bequest your life insurance to a charity, the transfer of ownership of your policy will provide you with a tax receipt for the policy’s cash value that is creditable to your current year’s tax return.
If you still owe premiums and assume you pay them, you can collect donation receipts for these payments as well. This allows you to claim credits on your tax return within your lifetime and reduces your tax burden today instead of waiting for your estate to handle it.
4. You know where your money is going.
You might task your executor or a family member to distribute assets appropriately upon your death. Still, there’s no way of knowing with the utmost certainty that a bequest to charity will happen unless you state it in a will.
When you start work on your will with a lawyer, it’s a great benefit to you and gives you the chance to think about and solidify exactly what will happen with your estate upon your passing.
5. You make the charitable bequest on your terms.
A bequest to charity is written according to how you want it. You can donate a percentage of your estate, a specific property, securities, or other assets. You can make a bequest to charity contingent on when other named beneficiaries have died. It is totally within your control of what conditions you put on a legacy and how it will be used, assuming it is legally allowable.
6. You help future generations of people.
A gift to charity takes what assets you’re willing to provide an organization and helps future generations of people like you benefit from them. Charities survive, like every organization, on finances.
Every donation matters, even if it’s not a specific dollar amount. By making a bequest, you’re ensuring your contribution will go to a cause you’re passionate about and to someone like you.
7. You receive recognition for your kindness.
What we leave behind in terms of assets doesn’t serve any purpose to a person who has died outside of their legacy. A bequest is something charities are very grateful for and, depending on what it is, there is a wide array of ways to recognize the source.
As one of your last acts, arranging a bequest to charity is a way to ensure the good you’ve done in your life. The assets you’ve accumulated carry on and do further good beyond what you’re able to do.
8. A charitable bequest is efficient to perform.
From the perspective of the executor, charitable bequests are very efficient when it comes to settling an estate. There is often clear instruction on distributing a bequest to charity, and it is considered more efficient than other bequests or directives. In a way, you’re helping streamline the executor’s work, which can sometimes be tedious, especially with large families.
9. Charitable bequests are easy to update in your will.
Entering a bequest to charity into one’s will is fairly easy to do. All it is is a short paragraph. It’s simple enough to do should you change your mind or want to make changes. Any estate planning professional can counsel you on how to do that. This ensures your wishes are always reflected in your will.