What You Should Know About Bequeathing to Charity in Your Will

Writing your will is an opportunity to think about how you’d like people to remember you when you’re gone. For lots of families, that means choosing guardians and providing for children in the will. Another way to keep your legacy alive? Donating to charity.

Whether you call it a bequest, an endowment, a legacy, or simply a gift, money or assets you leave to charity can be a meaningful part of your final plans. No matter how large or small your estate is, there’s probably a way to leave a legacy to a cause you care about.

What Is Bequeathing to Charity?

Donating to charity doesn’t always mean writing a check. There are a number of different ways to give back through your estate planning.

At Fabric by Gerber Life, we know life insurance like the back of our hand, but we’re not estate attorneys and we don’t know all the details of your individual finances. So, before deciding how to incorporate charitable giving as part of your estate plan, we encourage you to speak with a qualified legal professional about your specific needs and goals. With that in mind, here’s an overview of some of your options for charitable giving.

Cash donation through your will

Any reputable charity can put a cash donation to good use. These are a few ways you can divide your money between your loved ones and favorite organization by naming them in your last will and testament:

• General gift: Name a specific amount of money or a percentage of your estate that should go to your preferred charity.

• Residual gift: Designate how much of your estate should go to each of your other beneficiaries, and then send anything that’s left over to charity.

• Contingent gift: You can choose to donate to charity as a backup plan, such as if your beneficiary passes away before you. The condition doesn’t need to be based on death, either. You could theoretically say that if your cousin goes to rehab and stays out of jail, he gets $10,000, but otherwise the money will go to an anti-addiction organization you support—but of course, check with an attorney about the specifics for your situation.

Donating investments to charity

You can donate most stocks, bonds or mutual funds directly to a charity. In fact, this option can be better for some charities than if you sold the investment and donated the cash. That’s because donating an investment directly may help you avoid capital gains taxes, so the charity receives more money than if you’d cashed out the investment and donated the after-tax dollars. There may also be some applicable income tax deductions by donating certain investments to charity.

This method of giving might work best for larger charities that have the brokerage relationships in place to transfer stocks or other publicly held securities efficiently. A smaller charity might welcome a donation of stock, even if it means they need to hire someone to help manage the transfer. Or they might prefer cash. When in doubt, call the charity you have in mind and ask what kind of gift is easiest for them.

Like this option? Contact your favorite charity and ask what the steps are to initiate a “transfer in kind” donation of investment accounts.

Naming a charity as your life insurance beneficiary

Some life insurance policies allow you to name a charity as a beneficiary. Most life insurance providers let you customize what percentage of a life insurance payout goes to each beneficiary, so you can split beneficiary shares however makes sense to you.

Some policies also offer a charitable giving rider. This donates the equivalent of a portion of the policy’s face value (usually 1-2%) to charity. In some cases, you can choose the charity; in other cases, the insurer donates to a charity of its choosing on your behalf. Importantly, that’s in addition to the payout that goes to your beneficiaries. In other words, the charity doesn’t get anything until you die, but then 1-2% is added on top of the policy face value you purchased and given to charity.

If you have a whole life insurance policy and designate a charity as the owner and beneficiary, it might be possible for you to deduct any further premiums you pay into the policy, since the policy would belong to the charity outright. (If you have a term life insurance policy, you can’t write premium payments off as a tax deduction, even if a charity is the sole beneficiary.)

Rules around tax deductions for life insurance can get complicated, so discuss your plans with your accountant to stay on the right side of the IRS.

Bequeath a specific object to charity

Some charities accept tangible items as well as funds. For example, if you have historically significant heirlooms, you might leave it to a museum, preservation society or library. Another common item to donate is a car. Your estate would typically claim a tax deduction for the fair market value or the auction price of the car, depending on whether the charity sells the vehicle.

One reason to do this is that your family wouldn’t have to deal with selling or disposing of an old car. If possible, talk to the administrators or curators in advance to confirm that they are able to accept your donation. You can also schedule an appointment with a professional appraiser to check the value of heirlooms like antiques. Better to make arrangements now than leave family members guessing what to do when your preferred institution doesn’t have space for your intended gift.

Consider a charitable annuity

Universities, nonprofits, health organizations and more may offer annuities for planned giving.

An annuity is a type of insurance contract where you pay now, in exchange for receiving regular payments later; many people use this as a form of “income” in their later years. Annuities offer tax-deferred growth and don’t have contribution limits like a 401(k) or IRA, making them a sound savings vehicle for some people’s retirement income. In other cases, an annuity’s fees and commissions might overshadow the advantages.

In the case of a charitable annuity, you’d donate money to the organization you support, and they’d take out an annuity on your behalf. You’ll get a percentage of that donation back every year based on your age (the older you are when you set up the annuity, the higher your disbursement percentage). When you pass away, the organization keeps the remaining balance.

If you’ve run the numbers and decided an annuity is a smart move for you, a charitable annuity can check off two boxes at once: You can move forward with an annuity as part of your financial management, and plan for remaining funds to benefit a charity you support.

If you itemize your taxes, you can take a deduction for the portion of your donation that the charitable organization expects to keep, based on IRS tables.

Annuities often make more sense once you’re getting closer to retirement age than when you’re in your 20s or 30s. But if you’re younger and thinking about how to include a charity in your estate planning, it’s worth keeping this option in mind for the future.

Open a donor-advised fund

A donor-advised fund (DAF) is an account you can set up for charitable giving. This allows you to set aside charitable assets now (and get a tax deduction now) but make the final decisions on where the money should go later.

Here’s how it works: You contribute money, public securities like stocks, or other eligible gifts (like life insurance or real estate) into the DAF. Officially, a public charity “sponsoring organization” owns and manages it; they can invest the money and let it grow tax free.

From there, you choose from charities the sponsor organization works with, and make “grant recommendations” (in other words, say how much you’d like to give from the DAF to a particular charity). The sponsor organization typically allows you to choose from a wide range of eligible 501(c)(3) organizations that count as “qualified charities.”

You get to claim any eligible income tax deductions the same tax year you contribute to the DAF, even if you don’t select a receiving charity right away.

A DAF is worth looking into when you’re doing estate planning for a couple reasons:

1. In some cases, you might prefer to get a tax break for charitable giving now and decide on a recipient later—and you might decide you prefer to do it while you’re alive rather than upon your death.

2. A DAF can be a more convenient, lower-cost alternative to establishing a foundation to carry out your charitable plans. You don’t need to be a millionaire; some organizations let you start with a minimum balance of $5,000.

3. A DAF can make it easier to donate anonymously than a direct donation, if privacy is important to you (for example, you don’t want your spouse getting lots of mail asking for more donations in your name after you’re gone).

4. A DAF can pass to a successor after you die, enabling your family to keep using those funds and making decisions about which charities they’d like to support. You can also opt to close the DAF and select your favorite nonprofits to receive remaining distributions after your death.

Do note that the sponsor organization will charge an annual administration fee (typically around 0.6% of the account balance) and investment fees. Factor the advantage of tax-free investment growth against the cost of fees to see whether you’re better off with a DAF or giving directly to your chosen charities.

Benefits of leaving money to charity

Here are a few of the emotional benefits of leaving money to charity:

• Care for others. Part of your estate can provide food, shelter, medicine or other critical resources for people or animals in need.

• Support a cause you believe in. Many arts institutions, environmental organizations and medical research charities rely on donations as an important source of funding.

• Choose a beneficiary you feel connected to. If you don’t have close family, you might decide that it’d be more meaningful to leave money to an organization you care about, rather than a second cousin you barely know.

• Leave a legacy for your name. Even if you have close family and friends, you might feel that leaving a gift with a broad reach is important to you. If you want your family to

How leaving money to charity affects your taxes

Your estate will be subject to estate taxes if it’s larger than a certain size. As of 2025, the “basic exclusion amount” is $13,990,000. That is, if your estate is valued below $13.99 million, you won’t be subject to estate taxes if you pass away in 2025.

This level of wealth would put you in the top 1%, so federal estate taxes won’t apply unless you’re in that vaunted group. Twelve states and the District of Columbia set their own state estate taxes with lower exclusion amounts, though. If your state has estate tax, charitable giving may have some meaningful tax implications for you. If you expect your state to be over the limit, work with a financial professional to explore how charitable donations may help reduce or eliminate tax obligations.

If you’re thinking about taxes, ask a financial professional if it makes more sense to give while you’re still alive. In many cases, you might get a bigger tax advantage by claiming a tax deduction against your yearly income tax, rather than focusing on estate taxes.

At the end of the day, a will is a legal and financial document, but it can also serve as a form of personal expression. Leaving gifts for charity can benefit others and give you one more chance to take action for causes that are important to you.

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