5 Ways to Include Charity in Your Estate Plan (And Why Your Heirs Will Thank You)

Most people think of estate planning as a document exercise — a will, maybe a trust, some beneficiary forms. Get it done, put it in a drawer, move on.

But an estate plan is really a values document. It's the clearest statement you'll ever make about what mattered to you, who you cared for, and what you wanted to leave behind.

For people who care about giving, including charity in that plan isn't just a tax strategy. It's a way of saying: this was part of who we were.

The good news is that including charity in your estate plan doesn't have to be complicated, and it doesn't have to come at your family's expense. Here are five straightforward ways to do it — and why, in many cases, your heirs will actually benefit from the approach.

1. Name a Charity as a Beneficiary on Your IRA

This is the single most tax-efficient charitable estate planning move available — and one of the simplest.

When an individual inherits a traditional IRA, they inherit it as taxable income. Under current rules, most non-spouse beneficiaries must withdraw the entire account within 10 years, paying income tax along the way. A $500,000 IRA left to a child could result in $150,000 or more going to the IRS, depending on their tax bracket.

When a charity inherits an IRA, they pay zero income tax. The full amount goes to the cause.

The smart move: leave your IRA to charity, and leave assets that receive a stepped-up basis at death — like brokerage accounts or real estate — to your heirs. Your heirs pay little or no capital gains tax on those inherited assets. The charity receives the IRA tax-free. Both benefit more than if you'd done it the other way around.

All it takes is updating your beneficiary designation form. No will, no attorney, no probate required.

2. Include a Charitable Bequest in Your Will or Trust

A charitable bequest is a gift made through your will or revocable living trust. It's one of the most flexible and widely used forms of charitable legacy.

You can structure a bequest in several ways:

• Specific bequest: A fixed dollar amount or specific asset left to a named charity
• Percentage bequest: A percentage of your estate — "10% of my residual estate to [charity]"
• Residual bequest: Everything left after specific gifts to family and other heirs
• Contingent bequest: A gift that only takes effect if a primary beneficiary doesn't survive you

Bequests cost you nothing during your lifetime. You retain full control of your assets and can change the bequest at any time. And for larger estates, charitable bequests can reduce estate taxes — a benefit that flows directly to your heirs.

If you've ever said "I'd like to leave something to [organization] someday," a bequest is how that intention becomes real.

3. Use a Donor-Advised Fund as a Family Legacy Vehicle

A donor-advised fund isn't just a tax tool for your lifetime — it can also serve as a multigenerational giving vehicle for your family.

When you establish a DAF, you can name successor advisors — your children or grandchildren — who will continue recommending grants after you're gone. The fund carries your family's name, reflects your values, and gives the next generation a structured way to carry on your philanthropic legacy.

This approach is particularly meaningful for families who want to pass down more than wealth. A named family fund creates a tradition of generosity — regular conversations about causes, intentional giving decisions, and a shared identity built around something bigger than money.

You can fund the DAF during your lifetime, through your estate, or both. And unlike a private foundation, a DAF requires virtually no administrative overhead.

4. Set Up a Charitable Remainder Trust for Income and Legacy

If you have highly appreciated assets — real estate, stocks, a business interest — and you want to turn them into retirement income while also leaving a charitable legacy, a charitable remainder trust (CRT) deserves a close look.

Here's the structure: you transfer appreciated assets into the trust. The trust sells them without paying capital gains tax. You receive an income stream for life — protecting your retirement cash flow. At your death, the remaining assets pass to your chosen charity.

The benefits for your heirs: by removing the appreciated assets from your taxable estate and replacing them with an income stream, a CRT can actually reduce estate tax exposure. Some families pair a CRT with a life insurance policy — funded by a portion of the income from the trust — so heirs receive an equivalent inheritance while the charity receives the remainder.

Done well, this structure lets you give significantly, live comfortably, and leave your family whole.

5. Give Appreciated Assets During Your Lifetime

Estate planning isn't only about what happens after you're gone. Some of the most impactful charitable giving happens during your lifetime — and the tax benefits flow to you directly.

Donating appreciated stock, mutual funds, or real estate to a charity or donor-advised fund during your lifetime allows you to:

• Avoid capital gains tax on the appreciation
• Receive a charitable deduction for the full market value
• Reduce the size of your taxable estate
• See the impact of your giving while you're alive to witness it

For many people, lifetime giving is more meaningful than a bequest. You get to see the cause benefit. You get to tell the story. And in many cases, the tax savings are significant enough to fund additional giving you might not have thought possible.

Why Your Heirs Will Thank You

Here's the counterintuitive truth about charitable estate planning: done thoughtfully, it often benefits your heirs more than a straightforward inheritance would.

When you coordinate which assets go to charity (IRAs — taxable for heirs, tax-free for charity) and which go to family (appreciated assets with stepped-up basis — minimal tax for heirs), you can maximize what both groups receive. Add in estate tax reduction from charitable bequests or a CRT, and the math often works out in everyone's favor.

Your heirs don't lose. Your cause gains. And your estate reflects who you actually were.

That's the goal of a good estate plan — not just transferring wealth, but transferring values alongside it.

Ready to Start the Conversation?

If you've been thinking about how to include charity in your estate plan — or if you're not sure where to start — this is exactly the kind of conversation we have at Sage Street Wealth. We help you figure out what's right for your situation, your family, and the causes you care about.

See if Sage Street is the right fit for you →