Charitable Giving Strategies In Your Estate Plan

According to Philanthropy Roundtable, about 60% of all American households give to charity each year. Many of these families give and expect nothing in return. That said, giving to charity offers numerous potential benefits, especially in the context of estate planning in California. In fact, numerous charitable giving strategies have arisen over the years, and some of these methods could make it easier to achieve complex estate planning goals. Charitable giving strategies could be particularly effective for high-net-worth families who wish to address various tax implications. Of course, people from all walks of life can implement charitable giving strategies into their estate plans – even if this would offer minimal financial benefits. Families may want to discuss their specific goals with Wakefield Law Firm at our offices in San Diego County, Orange County, Los Angeles County, Riverside County, and San Bernardino County. Dial (949) 274-9975 to continue this conversation in more detail. 

The Benefits of Charitable Giving Strategies During Life

Many people choose to donate to charity while they are still alive. Although this may not be part of the estate planning process per se, it can still offer numerous financial benefits. Perhaps most notable, charitable donations during life provide income tax deductions. This may make it easier for retirees to handle the cost of living, especially during a year when tax obligations are particularly high. Note that California residents can also donate assets that have appreciated in value, such as stocks or real estate. This may offer additional reductions in capital gains taxes. In many cases, donating an asset that has appreciated in value is more beneficial than selling the asset and donating the proceeds. 

The Benefits of Charitable Giving Strategies in Estate Planning

Families may also implement charitable giving strategies into their estate plans. This approach involves planning donations that will occur after death, and the financial benefits of such strategies pass to the beneficiaries instead of the testator. Charitable giving strategies are common among high-net-worth families, as these donations can significantly reduce tax burdens for beneficiaries. 

Of course, charitable giving also provides non-financial benefits. For many California residents, the thought of leaving money to charity provides a sense of accomplishment. Charitable giving often represents an important priority for religious individuals. Consider discussing specific charitable goals with Wakefield Law Firm. 

Why Are Charitable Giving Strategies So Popular for High-Net-Worth Families?

Charitable giving strategies are popular for families who wish to avoid the federal estate tax. Because the federal estate and gift tax exemption is at historically high levels, donating to charity only makes sense for those with high net worths. In 2025, this exemption reached almost $14 million – and the current administration could extend it or even make it permanent. The main financial goal of charitable giving is to reduce the value of a taxable estate. As a result, those who pass away with taxable estates worth more than $14 million often consider charitable giving strategies. 

For example, an individual might approach end-of-life care with a taxable estate of $20 million. Because the federal estate tax exemption only covers the first $14 million, the remaining sum would be subject to taxation. According to the Internal Revenue Service (IRS), the first $1 million of this remaining sum would result in about $350,000 in estate taxes. Anything above the first million is subject to the highest tax bracket of 40%, which would result in an additional estate tax obligation of $2 million. As a result, the family would be left with a tax bill of about $2.35 million. 

Charitable Giving Allows You to Choose Where Your Money Goes

Why does it matter whether a high-net-worth family pays their non-exempt wealth to the government or donates it to charity? One might argue that either way, the family loses that hard-earned wealth. The answer is that when one donates to charity, they can at least choose where their money goes. The government spends tax dollars on many things that people disagree with, including wars, foreign aid, and various domestic programs. 

By donating to charity, California residents can choose the specific causes they wish to support. For example, someone might be very passionate about sports programs for children. Someone else might want to leave behind a substantial donation to their local library. Whatever the case may be, charitable giving strategies facilitate greater choice and control than simply leaving money to the taxman. 

How Do I Donate to Charity With an Estate Plan?

One of the most basic ways to engage in charitable giving strategies is through a “charitable bequest.” One can include this bequest in their Will, and it functions in the same way as leaving assets to a beneficiary. Testators may leave behind a certain amount of money, or specify that assets (including real estate) should be liquidated and transferred to charities. 

California residents may also establish charitable trusts. These trusts may allow families to achieve more complex estate planning goals, and there are various options to choose from. Established during life, a charitable remainder trust (CRT) can provide income for the grantor and their beneficiaries while reducing income, estate, and capital gains taxes. A charitable lead trust (CLT) provides gradual donations over a certain amount of time, and the remaining sum passes to the beneficiaries of the grantor. 

Create Your Own Charitable Foundation

Many of the wealthiest families in the United States have their own private, charitable foundations. Examples include the Bill & Melinda Gates Foundation, the Walton Family Foundation, and the Rockefeller Foundation. This is no coincidence, as these private foundations can offer considerable tax and financial benefits. The downside is that establishing a foundation takes considerable resources – and the process is subject to extensive regulatory oversight. Charitable giving has become a controversial topic in some circles, particularly among those critical of the wealthiest American families. This is because it is technically possible to promise or “pledge” to give assets to charity and experience tax benefits – without ever actually donating the promised sums. 

Discuss Charitable Giving Strategies With Wakefield Law Firm

Charitable giving strategies allow families to leave behind more than just wealth. When implemented correctly, this could help people make a real difference in the world – even after they pass away. While charitable giving may also offer unique estate planning benefits, its true worth goes beyond money. Each family may have unique goals when it comes to charitable giving strategies, and it makes sense to discuss these factors with an experienced estate planning attorney in California. Consider dialing (949) 274-9975 to continue this discussion with Wakefield Law Firm – an established estate planning law firm with offices in San Diego County, Orange County, Los Angeles County, Riverside County, and San Bernardino County.