There may be better alternatives to charitable gifts in your will

Many people include charitable gifts in their will. Not only do they want to help certain charities, but doing so can reduce estate taxes. But suppose that at some point, it becomes clear that your estate will likely incur little or no estate tax. You might consider removing all or part of such a bequest from your will, and instead making a gift while you’re still alive. Doing so could give you a large income tax deduction, while having no effect on your estate tax – leaving more assets for your heirs.

You might also want to amend your will and your power-of-attorney document so that if you become unable to manage your affairs, your agent can “pre-pay” a charitable bequest while you’re still alive in order to save taxes in this way.

Most power-of-attorney documents allow an agent to make gifts. But allowing an agent to make gifts is different from allowing an agent to pre-pay a bequest, so you might want to check your estate planning documents to see if they specifically allow this.

Here’s a variation on this idea. Suppose that in your later years your children’s income is considerably larger than yours. If you’re planning to make a charitable gift in your will, but it won’t save much in estate taxes, you might be better off leaving the money to your children with the understanding that they will use it to make the same charitable donation. That way, the charity will still get the gift, but your children will also get a valuable income tax deduction. (Of course, you have to be able to trust that your heirs will actually make the gift, and not just keep the money!)

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