What You Need to Know About Leaving Money to a Charity
Deciding to leave any portion of your estate to charity is a big step. Once you’ve made the mental and emotional commitment, you may be left wondering what’s next and how you can go about making your contribution dreams a reality.
There’s a few different ways you can make your wishes to donate funds to charity known.
- You can assign a certain amount to charity in your will and reference a Letter of Wishes that will include specifics on amount and distribution of your donations (if you’re leaving money to more than one charity).
- You can set up a trust as part of your estate and designate the specifics of your charitable contributions to be paid from the trust.
- You can do what most people do and leave money to the charities of your choice as part of your will, just as you would to any other beneficiary.
Regardless of how you choose to make your desires to donate known, there’s a few important details you want to make sure you consider and include in your records to minimize confusion and limit the possibility of errors in distribution.
The devil is in the details. Prevent headaches and unnecessary work by being specific about what charities you want to donate to. That means if you’re thinking of leaving money to an organization, you’ll need to name the company and if possible list contact information for it (as you would for a human beneficiary). Or, if you would like to donate to a cause, as opposed to a specific organization, assign someone you trust to identify what charities working for that cause will receive a donation.
You’ll also need to be very clear about what you’re leaving to charity. Is it a specific dollar amount; a percentage of your estate or of an asset; or is it something besides money, like land.
If you plan to leave an asset like property to a charity, you’ll need to include any specifics on your requests for how they will use it (if you have wishes for the way it’s used). Including details for what will happen if the usage terms are violated. For example, if you leave it for the purpose of worship and the charity decides instead to use it as a retail space, who will the land return to then? This information should be mirrored in the deed as well.
It’s not often that the terms of an inheritance like that are violated, but in the event you are donating land and you want it used for something specific or special (or not used for something in particular) you can work with an expert to create a contingency plan in the event your wishes aren’t being honored.
Assign Someone You Trust to Execute Your Will
When you decide who you’d like to act as executor of your will, make sure it’s someone you can trust to honor all of your wishes, including any donations you’d like made to charity. For some understanding charitable aspirations is easy, for others it’s more difficult. Try to pick an executor you know will defend and honor all of your wishes, not just the ones they may agree with.
Review Your Donation Plans with Family
To avoid issues after your passing it’s always a good idea to let important family members in on your plan. If you are worried that someone may disagree with or even challenge your charitable donations, you may save the rest of your heirs (and your executors) a lot of hassle by communicating your heartfelt wishes in person before your passing.