If you regularly give money to a favorite cause, you might consider leaving a portion of your estate to that organization after you’ve passed away. Some people even choose to leave their entire estate to charity. This benevolent use of your estate carries with it some issues you might not be aware of, for example:
- If you’re giving a portion of your estate to a charity, but leaving the rest of your estate to loved ones, you may want to avoid designating a specific amount of money to be distributed to the charity – particularly if the amount you plan to designate is a large sum. Why? If you pass away owning less than you expect, the charity will still be entitled to the dollar amount specified in your estate plan. This can mean that the bulk of the assets you’d intended to go to your loved ones could instead end up in the hands of the charity. It may be better to designate a percentage of your estate for the charity instead.
- Another potential complication can arise when you make a plan that leaves your entire estate to charity, and later revise that plan to cut out the charity and name your loved ones as beneficiary instead. This type of change, if not handled appropriately, can result in the charity challenging your estate plan after you’ve passed away.
Your estate planning attorney can help you design a plan that accomplishes your charitable goals while avoiding any potential missteps.