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Guide

How To Leave Your Inheritance to an Organization


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Some people choose after their death to give their inheritance to a specific charity or organization. The good news is that you don’t need a famous last name to give like a philanthropist.

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If you want to leave some or all of your money to a charity, here’s what you need to know about making charitable donations as part of your estate plan.

Confirm that the organization accepts donations

Before taking any further steps, you must first find out if the organization can accept donations and confirm this with the charity of your choice. Bruce Tannahill, MassMutual’s director of estate and business planning, said unless you have a formal agreement with the charity that says they will accept the inheritance, the endorsement isn’t a binding commitment.

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As such, you should check with the organization to see if there is any formal language that you may wish to include in your will or trust as part of a specific legacy. If the charity is currently unable to accept this type of donation, Tannahill recommends investigating what it will accept or whether other charities with a similar mission will accept it.

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Determine how much the charity should receive

Will you choose every penny of your estate, a specific dollar amount, or a specific percentage to donate to the charity? Decide how much you want the charity to receive, and also consider a possible estate tax exemption.

“Some people want to leave the inheritance tax exemption — the maximum amount that can happen without tax — to individuals and the rest to charity,” Tannahill said. “Because the inheritance tax exemption may change and the value of your wealth changes, the amount the charity receives will likely change once the planning is complete.”

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Plan ahead in case the charity no longer exists after your death

Some businesses, including non-profit organizations, are disbanding. If something happens and the charity you were trying to donate to doesn’t exist at the time of your death, what will you do next?

Estate planning attorney Andrew Ayers recommends taking the time to meet with your estate planning attorney and find out what will happen to the estate if the organization you are donating to no longer exists. You can plan ahead to pass on the legacy to another organization and ensure they receive the funds. Or you can have the inheritance traced back to the general distributions in your will.

Communicate how your gift will be used

If you would like the charity to use the legacy in a specific way, you can certainly check with the organization and find out more. Find out if the charity accepts this type of restriction, how long it can last, and what happens when the charity stops using it for this purpose.

Do you get credit or naming rights?

Some individuals may also be interested in receiving recognition for their heritage. This may include an acknowledgment or announcement of the donation or possible naming rights.

If you would like to receive recognition for your gift, particularly naming rights, Tannahill recommends asking yourself the following questions:

  • What will the name be if you can get naming rights?
  • How long will the name stay?
  • What if your heirs don’t like something the charity does or doesn’t do?
  • What happens if the charity doesn’t like something you or your family have done or are doing?

Work with an estate planning attorney

When drafting charity planning regulations, make sure you do so with an estate planning attorney who is familiar with your needs.

Tannahill said the provisions in your will should be specific to your wishes and allow your personal agent, executor or trustee enough flexibility to adapt to the conditions at the time of your death.

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About the author

Heather Taylor is Senior Finance Writer for GOBankingRates. She is also the lead writer and brand mascot enthusiast at PopIcon, Advertising Week’s blog dedicated to brand mascots. It has been published on HelloGiggles, Business Insider, The Story Exchange, Brit + Co, Thrive Global and more.

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