Make Charitable Giving a Win-Win Part Of Your Wealth Plan
You can do a lot of good while getting a good tax break, but the details of the setup are important, and so is how you communicate your wishes to your heirs.


There are tremendous breaks and incentives written into the tax code for charitable giving, and you don’t have to be wealthy to take advantage of them. But they’re most successful for people who truly have a charitable bent — those who sincerely want to see some of their money go to the charity or charities they care about.
That’s because most charitable-giving strategies require a fair amount of planning, paperwork, and set-up and maintenance costs. The tax benefits being what they are, though, it’s worth the effort.
They include:

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
- You can sell highly appreciated assets — real estate, stocks, etc. — within a trust and preserve the full fair-market value instead of losing money to capital gains taxes.
- When an asset is sold, there are income tax benefits upfront, based on the value of the gift you’re making to charity, and possibly in the future, depending on how the gift is set up and if it includes an income stream.
- Generally, once you set up your fund or trust, the value of the donated assets comes out of your estate, reducing the amount of money your estate must pay in taxes when you die. That’s helpful because while the exemption for federal income taxes on estates is $5.49 million, several states start taxing estates at limits much lower than that. Oregon’s estate tax, for example, kicks in at $1 million.
The biggest disadvantage to some of the more common forms of charitable giving is that you are, in a way, disinheriting your children. Basically, the charity gets their inheritance. But fear not: There are strategies for “re-inheriting” them — including using the income stream you’ve created within a trust to pay for life insurance premiums. So you can give to your favorite charity and still provide for your heirs — a win-win.
There are many kinds of charitable-giving vehicles: donor-advised funds, pooled-income funds, charitable trusts, life-estate agreements, private foundations and more. When making your choice, you’ll want to consider both the tax implications and how much flexibility you’ll have as a donor — especially if you’re the type of person who likes to have a say in how your money is spent.
It’s important to use a qualified financial professional who can help you plan out your finances, assets, allocations, legacy plans and charitable giving. Planning your finances the right way is vital and is not a do-it-yourself project. With much of your future riding on your income, relying on a professional with adequate experience is a must.
It’s also a good idea to communicate your wishes to your children or any other family members who might be affected by your plans. A conversation now could avoid turmoil down the road, especially if they are expecting to inherit specific assets.
For some families, philanthropy is a way of life, passed down from one generation to the next. But if it’s new to your family, you’ll want to be clear about what you’re doing and why.
Obviously, this is a complicated matter. If you’re considering making charitable giving part of your wealth plan, consult with a specialist — better yet, a team of specialists, including a financial professional, a tax attorney and an estate-planning attorney with experience in charitable contributions.
They can walk you through any complex legal matters, and around any obstacles that could get in the way of your success.
Kim Franke-Folstad contributed to this article.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Don Bergis is an Investment Adviser Representative (IAR) and the founder of Authentikos Advisory, a full-service fiduciary firm focused on the protection and growth of client assets toward and through retirement.
-
Donating Complex Assets Doesn't Have to Be Complicated
If you're looking to donate less-conventional assets but don't know where to start, this charity executive has answers, such as considering a donor-advised fund (DAF) for its tax benefits and ease of use.
-
Travel trends you can expect this summer
The Kiplinger Letter Domestic trips will trump foreign travel amid economic uncertainties, though some costs are down.
-
Donating Complex Assets Doesn't Have to Be Complicated
If you're looking to donate less-conventional assets but don't know where to start, this charity executive has answers, such as considering a donor-advised fund (DAF) for its tax benefits and ease of use.
-
Think a Repeal of the Estate Tax Wouldn't Affect You? Wrong
The wording of any law that repeals or otherwise changes the federal estate tax could have an impact on all of us. Here's what you need to know, courtesy of an estate planning and tax attorney.
-
In Your 50s? We Need to Talk About Long-Term Care
Many people don't like thinking about long-term care, but most people will need it. This financial professional recommends planning for these costs as early as possible to avoid stress later.
-
Social Security Pop Quiz: Are You Among the 89% of Americans Who'd Fail?
Shockingly few people have any clue what their Social Security benefits could be. This financial adviser notes it's essential to understand that info and when it might be best to access your benefits.
-
Such Attractive Yields in High-Grade Munis Are Rare and May Not Last Long
According to this munis expert, the last time munis were this cheap was a brief period in 2023. If you kicked yourself for missing out then, you have a second chance now.
-
Financial Analyst Sees a Bright Present for Municipal Bond Investors
High-tax-bracket investors have an excellent opportunity to secure low-volatility, high-quality returns at yield levels rarely seen in over a decade.
-
I'm an Insurance Pro: How Not to Get Dumped by Your Insurance Agent
Your insurance agent or broker might show you the door if you do any of these five things. Being a good customer is about more than paying your bill on time.
-
Two Estate Planning Issues You Should Never Overlook
This estate planning attorney explains why proper asset titling and beneficiary designations make a big difference when it's time to transfer your wealth.