A Step-by-Step Estate Planning Checklist for Charitable Giving 

People often spend years accumulating assets, such as real estate, yet many lack knowledge about estate planning. This is why in this blog, we will explore the estate planning checklist and its importance. Estate planning is critical because it ensures that your assets are distributed according to your wishes after death.

For those who have dedicated time and resources to charitable causes, incorporating charitable giving into your estate planning is a way to continue making a difference, even after passing away. This step-by-step estate planning checklist for charitable giving could help you through the process, ensuring your legacy has a long-lasting impact. 

Statistics show that charitable donations have a truly enormous impact. According to Giving USA 2022, individuals, bequests, foundations, and corporations donated approximately $484.85 billion to U.S. charities in 2021. Additionally, bequests accounted for 9% of this total, underscoring the importance of including charitable donations in estate planning.

Incorporating charitable giving into your estate plan not only advances the causes you care about but can also provide tax benefits, potentially increasing the value of your estate to your heirs. It’s a powerful way to leave a legacy that reflects your values and contributes to a better world. 

Stay with us as we delve into the crucial details of an estate planning checklist to help you navigate your estate planning effectively. We’ll discuss what assets are and what vehicles you might use for estate planning.

What Is an Estate?

So, what is an estate? The word has a double meaning: it also means the money and property owned by a particular person.

An estate represents the totality of an individual’s possessions, assets, and interests at the time of death. It is a comprehensive term that encapsulates everything from the tangible, such as real estate and personal property, to the financial, including bank accounts, stocks, and life insurance policies.

An estate is the embodiment of a person’s work and interests. As we said, it includes physical properties, financial assets, and intangible interests. This could include anything from a house or land to vehicles, artwork, personal items, investments, retirement accounts, and the proceeds of life insurance policies.

Understanding what an estate includes is fundamental to estate planning, a process that ensures that a person’s assets are distributed according to their wishes upon their death. Estate planning also considers the management of an individual’s affairs in the event of incapacity.  

An estate planning checklist is important because it is a thoughtful process designed to ensure that an individual’s assets are managed and distributed according to their wishes after passing. Estate planning aims to minimize taxes and legal fees, potentially preserving a greater estate share for intended beneficiaries. For those with dependents, it is also a means of securing their future, appointing guardians, and arranging their care and financial support.

It is a structured and complex activity that generally involves several key steps. Initially, it involves taking stock of your assets, an overall assessment that lays the foundations for all subsequent decisions. Next, individuals must clarify their intentions regarding their assets, decisions that range from the simple to the deeply personal, such as who will inherit certain assets and who will oversee the execution of the inheritance.

Given the legal and financial complexities involved, consulting with professionals—estate planning lawyers and financial advisors—is an indispensable part of the process. These experts guide the creation of the necessary legal documents, such as wills and trusts, and ensure they comply with state laws and regulations.

One of the most critical aspects of estate planning is its dynamic nature; it is not a one-off activity but a process that requires regular review and updating. Numerous life changes – marriage, the birth of children, significant financial changes, and more – require revisions to ensure the estate plan remains aligned with the individual’s current circumstances and wishes.

An estate reflects a person’s life, encompassing the totality of his or her possessions, financial resources, and personal interests. Estate planning, in turn, is the process by which an individual can ensure that their inheritance is managed and distributed according to their wishes, providing peace of mind and security to both the individual and their loved ones. 

Through careful planning and regular updates, an estate plan can serve as a final testament to a person’s life and values, ensuring their impact is felt long after they are gone. It doesn’t seem so complicated anymore if explained like this, does it?

Secure your legacy today. Engage us in your estate planning and in creating an estate planning checklist to ensure your wishes are honored, and your loved ones are cared for. Your efforts are not merely for peace of mind but a decisive step towards safeguarding your impact and values for generations to come.

An Analysis of 9 Estate Planning Strategies 

By now, we have understood that estate planning is a critical aspect of financial planning that ensures that your assets are distributed according to your wishes after your death. It comprehensively analyzes various strategies to manage and preserve wealth to benefit your heirs or chosen beneficiaries.

Let’s analyze nine estate planning strategies together, delving into each approach and highlighting its importance in creating a solid estate plan. Let’s go through this estate planning checklist step by step.

1.  Creation of the will. A critical strategy is creating a will, the cornerstone of any estate plan. Specify how your assets should be distributed, who should care for any minor children, and name an executor to oversee the liquidation of the estate. It is the most important thing for getting your affairs in order.
2. Establishment of trusts. Trusts are versatile tools that can help bypass probate, reduce estate taxes, and ensure the management and distribution of assets according to specific terms. Revocable living trusts and irrevocable trusts are popular options, each serving different estate planning goals.
3. Beneficiary designations. Some assets, such as life insurance policies and retirement accounts, allow you to designate beneficiaries directly. These designations are crucial as they override instructions in wills and trusts, ensuring that specific assets go to intended beneficiaries without going through probate.
4. Health directives. A health care directive, which includes a living will and a health care power of attorney, outlines your wishes for medical care if you cannot communicate. This strategy ensures that your healthcare preferences are respected and appoints someone to decide on your behalf.
5. Financial power of attorney. Giving someone you trust power of attorney over your finances allows them to manage your financial affairs if you are incapacitated. This can include paying bills, managing investments, and making other financial decisions.
6. Gifts. Gifting assets during your lifetime can reduce the size of your estate, potentially minimizing estate taxes. Annual gift tax exclusions allow you to give a certain amount to as many people as you want without incurring gift taxes.
7. Estate tax planning. What is an estate, then? We established we are not talking about your house and land only. Advanced tax planning strategies for larger estates, such as charitable giving, creating family limited partnerships, or using life insurance policies within irrevocable life insurance trusts, can help mitigate estate and gift taxes.
8. Charitable contributions. Including charitable contributions in your estate plan can reduce your taxable estate and support causes that are important to you. Strategies like charitable trusts can provide income during your lifetime, with the remainder going to charity.
9. Periodic review and updating. Estate plans should not be static. Regular reviews and updates in response to life changes, such as marriage, divorce, births, and deaths, ensure your estate plan remains aligned with your wishes and current circumstances. It would be ideal to get your will and estate planning checklist together.

Your Estate Planning Checklist: 7 Steps To Charitable Giving

At the Miami County Foundation, we always work together with our grantees to discuss all possibilities and clarify things as much as possible. Together, we’ll review our estate planning checklist and address any additional questions you may have.

1. Catalog your resources 

The process begins with a complete inventory of your assets. This includes:

• Checking and savings accounts: Checking accounts are for everyday transactions, while savings accounts are for saving money and typically earn interest. Both are considered liquid assets because they are easily accessible.
• Retirement accounts: These include IRAs (Individual Retirement Accounts) and 401(k), with specific tax treatments and beneficiary designation features. IRAs offer tax advantages for savings.
  • 401(k) is a retirement savings plan employers offer with tax advantages. Tax treatments include tax-deferred growth and potential contribution deductions. Beneficiary designation allows these accounts to be transferred to designated individuals upon the account holder’s death.
• Real estate: This includes your primary residence and any other property you own. Each state has its own laws regarding transferring real property upon death. Kansas allows the transfer of real property upon death through a transfer on death (TOD) deed. This tool allows property owners to name a beneficiary to inherit the property without going through probate.
  • Probate is a legal process that takes place after someone passes away. It involves proving in court that a deceased person’s will is valid, identifying and inventorying the deceased person’s property, appraising the property, paying debts and taxes, and distributing the remaining property as the will (or state law if there’s no will) directs. 
• Stocks and bonds: investment assets that can grow over time. Their value and the transfer process on death may vary. Stocks represent shares in a company, potentially providing dividends and capital gains. Bonds are loans made to companies or governments, which earn interest over time. Their transfer upon death can be facilitated through beneficiary designations or estate planning tools such as wills and trusts.
• Valuable personal assets: Items of significant value, such as artwork, jewelry, or collectibles. The process of cataloging and valuing these items for estate purposes can vary but generally involves an appraisal to determine their value for equitable distribution or sale.

Understanding what you own allows you to effectively plan how you want to distribute your assets, including charitable donations. Different states may have specific rules about how these assets are inventoried and valued in an estate, especially real and personal property. Kansas recognizes TOD deeds for real estate, allowing you to bypass probate. Other assets may require specific estate planning tools and legal documentation to ensure a smooth transfer and compliance with the owner’s wishes.

2. Decide on your charitable goals

Thinking about your charitable goals involves considering the causes you’re passionate about and how you want to support them. This decision should align with your personal values and the impact you want to have. Whether supporting education, environmental conservation, healthcare, or community services, your goals can guide the structure of your estate plan. 

Choosing your best charitable focus involves thinking about your personal values and interests and finding a local organization like the Miami County Foundation whose programs align with those priorities. When considering our organization, explore the specific grants and scholarships we offer, our target beneficiaries, and the impact of our work in the local community.

3. Consulting professionals 

Addressing the complexities of charitable giving in estate planning requires professional advice. Financial advisors, estate planning attorneys, and tax professionals can offer crucial insights, especially because tax laws and wealth regulations vary significantly from state to state.

4. Choose the right vehicle for charitable donations

• Bequests: Bequests involve leaving part of your estate to charity in your will, a simple method subject to state-specific inheritance laws. Designating a portion of your estate to a charity through your will is simple, but the process of executing a will may vary from state to state due to different inheritance laws.
• Charitable Remainder Trusts (CRTs): Charitable Remainder Trusts (CRTs) provide you with income for life, with the remainder going to charity, offering tax benefits that vary depending on state and federal laws. These allow you to receive income during your lifetime, with the rest going to charity. CRTs’ setup and tax implications may vary based on state law and federal tax regulations.
• Retirement Accounts: Naming a charity as the beneficiary of accounts like IRAs or 401(k)s is tax efficient because charities are exempt from income taxes on their distributions. The process for designating a charity as a beneficiary and the tax consequences may depend on both state law and federal regulations.

5. Make it official 

Updating your will and other estate documents to include the charity guarantees that your plans are legally recognized. Legal document requirements may vary by state, affecting how you structure and formalize your plans.

6. Inform charities and loved ones 

Communicating your charitable intentions to beneficiary organizations and family members can prevent misunderstandings and ensure your wishes are clearly understood. This step is crucial, regardless of status, as it is more about personal relationships and clarity of intentions.

Not communicating your charitable intentions can lead to potential disputes among family members or beneficiaries and misunderstandings about your estate’s distribution. It may result in misallocating your assets, which may not align with your original wishes. This lack of clarity can also cause legal challenges, delaying the distribution process and possibly incurring additional costs to the estate.

7. Regular review and updates 

Life changes require updates to your estate plan to align with your wishes and current circumstances. State-specific legislative changes, moving to a different state, or changes in financial situation can impact your estate planning, including charitable giving strategies.

In the United States, estate and tax laws vary widely from state to state, affecting how charitable giving is integrated into estate planning. For example, some states may have favorable laws for creating and benefiting charities, while others may have specific incentives or exemptions for property taxes when charitable donations are involved. 

State and federal tax laws may also affect the process and implications of naming a charity as a beneficiary in a retirement account. In Kansas, charitable giving under estate planning can use tools such as Transfer on Death (TOD) provisions, which allow assets to bypass probate and transfer directly to a named beneficiary, including charities. 

This method is effective for both real estate and financial accounts. Kansas does not impose a state estate tax, which simplifies the tax planning aspect of charitable giving. However, federal tax laws continue to apply, especially for significant charitable contributions that could impact your federal estate tax liabilities. For specific strategies, such as naming a charity as the beneficiary of your retirement accounts, it is important to adhere to both federal guidelines and any state-specific regulations that may affect the process.

Creating an effective estate plan and an estate planning checklist with a heart of giving not only protects your legacy but actively shapes the future of the Miami County community through thoughtful support. This process involves cataloging assets, aligning charitable goals with your values, and consulting with professionals to ensure your vision is realized legally and effectively.

By supporting the Miami County Foundation, you embody your legacy with generosity, significantly impacting causes close to your heart. Let’s face this journey together, making every step count towards a brighter, more compassionate community.

Interested in learning more about creating an estate planning checklist or contributing to our cause? Reach out with any questions you may have. With just one click, you can transform lives. Your donation has the power to create a significant change.