If you’re in the process of estate planning, you might be considering leaving some of your estate to charity. You may even be thinking about leaving all of your assets to charity.
Maybe during your estate planning process, you’ve decided to not leave assets to dependents. Or maybe you don’t have dependents.
Either way, there are important things to keep in mind when leaving your entire estate to charity.
You have probably considered why you want to leave your estate to charity. It’s equally important to ask yourself exactly what you want to give and how you want to give it.
On that note, I’m about to tell you one of the most important things you’ll need to know about leaving your estate to charity and estate planning in general.
If you die without a will, this is known as dying “intestate”. If you die intestate, provincial law governs how your assets are distributed.
So, even if you had verbally expressed at some point that you’d like your estate to go to charity, without a will, this isn’t going to happen.
The only way to be sure of your estate distribution when you die is to have a legally binding will in place.
Proper estate planning is also important for preventing financial disagreements after your death. I’ve written more about that here, and you don’t want to miss it.
If you have a will in place and you’ve decided to leave your entire estate to charity, here are some things you should know about taking this approach to estate planning.
It’s crucial to be specific about which charity you want your assets to go to. There are countless charities, so provide as much information about the specific charity as possible.
Remember: your entire estate doesn’t have to go to one place. You can divide it among a few or several charities.
Consider a scholarship.
You may want to consider setting up a scholarship instead.
This is a powerful way to create a legacy that can help generations of future students.
Your estate doesn’t need to be liquid to go to charity.
A liquid asset is one that’s easily turned into cash, like money in the bank that can be withdrawn.
If your estate includes something like a house, which isn’t necessarily considered a liquid asset, it doesn’t mean you can’t donate it.
The house could be sold and the funds directed toward your designated charity.
Setting up a foundation.
Setting up a foundation means your initial amount will be invested, and the income from that investment would be distributed to a charity or charities each year.
While you could set up your own foundation, another option is giving through a foundation that’s already established.
These are just a few of the things you’ll need to consider if you intend to leave your estate to charity. Another important factor is tax advantages for your estate.
Leaving your legacy.
Whether you’re giving some or all of your estate to charity, there are also ways to magnify your charitable gift-giving and make the most of it. You can learn more about that here.
All of these considerations can be tricky to navigate. That’s why you should always enlist legal help and financial advice from lawyers and financial planners or accountants before taking any steps in the process of estate planning.
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