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Charitable Bequests in Your Last Will and Testament: Will Your Intentions be Accomplished?

By Ann Salek

June 11, 2019

Many people satisfy their philanthropic goals through their estate plan.  You may have favorite charities that you support throughout your lifetime, but would also like to give a percentage of your estate to that charity when you pass.  If you have such charitable intentions, care must be given to your estate plan in order to make sure your intentions are actually accomplished.

People often designate a charity to receive a certain percentage of their estate through their Last Will and Testament.  What people may not realize is that percentage may not be based on all their assets.   For example, if your Last Will and Testament designates 10% to be distributed to your favorite charity, your charity will receive 10% of the probate assets only. 

Probate assets do not include assets with beneficiary designations such as IRA’s, 401K, life insurance, annuities, etc.  Probate assets also do not include property held jointly or property with a “payable on death” designation.  It is common for an estate to have most of the assets transfer outside of probate and only a small value administered through probate.  Assume your estate consists of IRA’s, “payable on death” investment accounts, bank accounts held jointly with a spouse or child, and a vehicle.  The only probate asset is the vehicle.  Your designation in your Will of 10% to a charity means only 10% of the value of the vehicle will ultimately be paid to that charity. Was that really what you intended?

If you would like to direct a percentage of your entire estate to a charity, you must take care to ensure that you individually address each asset you own.  Consider how that asset will transfer to a beneficiary and then make sure that the charity is included in that transfer process.  With proper planning, you can ensure your ultimate charitable intentions are accomplished.

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