Creating an estate plan is about more than just securing your assets for your loved ones—it’s also a chance to make a lasting impact on the causes you care deeply about. Charitable giving is a powerful way to leave your mark, support important work, and contribute to making the world a better place. Here in Pennsylvania, incorporating charitable contributions into your estate plan can also bring some significant tax advantages. Whether your passion lies in education, healthcare, the arts, or environmental conservation, there are plenty of ways to weave charitable giving into your estate plan. Let’s explore the benefits, methods, and Pennsylvania-specific considerations to help you make the most of your charitable legacy.

Why Charitable Giving Matters
Personal Fulfillment: Knowing that your support will continue to make a difference, even after you’re gone, brings a deep sense of satisfaction and purpose.
Tax Advantages: For federal and Pennsylvania taxes, charitable donations through your estate plan can help reduce estate or income taxes. For instance, when you make a gift to a charity under your estate plan, the transfer of the assets to the charity avoids any Pennsylvania Inheritance Tax, Federal Estate and Gift Tax, and eliminates recognition of income tax.
Strengthening Communities: Your charitable gifts can support local organizations that provide critical services, helping to build stronger, healthier communities right here in Pennsylvania.
Inspiring Future Generations: Your charitable giving sets a powerful example for your family and others, encouraging them to think about how they too can contribute to meaningful causes.
Ways to Give in Pennsylvania
Bequests in Your Will: A straightforward way to leave a charitable gift is by including a bequest in your will. You can specify a fixed amount, a percentage of your estate, or specific assets to be donated. This approach can also help reduce your estate’s inheritance tax liability.
Charitable Trusts: Charitable remainder trusts and charitable lead trusts are excellent tools for managing charitable giving. These trusts can provide income to your beneficiaries or a charity, depending on the type of trust, with the remainder going to the other party.
Bunching Charitable Gifts or Funding Donor-Advised Funds: After December of 2017, the Tax Cuts and Jobs Act (TCJA) was signed into law substantially increasing the standard deduction with many smart donors bunching their charitable gifts to ensure that deductions are financially beneficial to their tax planning. Although donor-advised funds were not affected by the TCJA, contributions to these funds continue to be fully deductible of the full amount of your contribution in the year in which you make the gift. You then select the timing and gifting of the amounts of gifts that are made from the fund.
Gifts of Appreciated Assets or Qualified Retirement Accounts: Donating appreciated assets like stocks or real estate can be a tax-efficient way to give. By donating directly to a charity, you avoid capital gains taxes and can claim a charitable deduction for the asset’s full market value. Similarly, when you pass a gift by naming a charity as a beneficiary under a retirement account (such as an IRA), you also avoid inheritance tax and income tax costs.
Qualified Charitable Distributions (QCDs): There is also an important rule regarding Charitable IRA Rollover Distribution. A QCD is a transfer of funds directly from an IRA of a person at least 70 ½ years old to a qualifying charity. For these individuals, QCDs of up to $105,000 may count toward their requirement minimum distributions (RMDs) for the year. Some donors utilize this technique to ensure that they keep their taxable income level at a lower bracket and reduce their potential exposure to Medicare surtax.
Charitable Gift Annuities: A charitable gift annuity allows you to make a significant donation while receiving a fixed income for life. In Pennsylvania, income from these annuities may even be partially exempt from state income taxes.
Making the Most of Your Charitable Giving
Identify Your Passions: Start by thinking about the causes and organizations that resonate most with you. Your gift can be a meaningful way to support the work you care about.
Consult with Professionals: Work with an estate planning attorney, financial advisor, or tax professional who understands Pennsylvania’s laws to structure your giving in the most beneficial way and to select the appropriate strategies, assets and timing.
Communicate with Your Family: Share your charitable intentions with your family so they understand your wishes and the reasons behind your decisions.
Review Regularly: As your interests and financial situation change, make sure to review and update your estate plan to reflect your current wishes.
Consider an Endowment or Legacy Fund: If you’re looking to make a lasting impact, setting up a legacy fund or endowment can support a cause or organization long into the future. In Pennsylvania, these can be established with local community foundations or directly with charitable organizations.
Incorporating charitable giving into your estate plan is a wonderful way to leave a legacy and support the causes that matter most to you. By thoughtfully planning your contributions, you can make a meaningful difference while also enjoying potential tax benefits. Whether through bequests, trusts, or other methods, your gift can help create a better world for future generations. Take the time to explore your options, work with professionals who know Pennsylvania’s laws, and ensure your estate plan reflects your values and passions.
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