Gifting Assets Through Your Will and Beyond

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As I sat down to write this post in my nice, warm office, the wind chill outside here in Minnesota was -31°F. I started thinking about all of the people who are struggling to stay warm in these conditions. That, in turn, got me thinking about the topic of charitable giving. The questions below are the questions I am asked most frequently about gifting and estate planning. Please note that this blog post only touches on charitable gifting; entire books have been written about this topic, so I can really only hope to scratch the surface here. Question (1): I want to leave 10% of my assets to my church at my death. Can I do this through my Will? Answer (1): You can leave either a specific dollar amount or a percentage of assets to your church or any other organization at your death through your Will, but it is important to remember that your Will does not control the disposition of assets like life insurance, accounts or assets held jointly with someone else, retirement assets or any other type of account or asset with one or more named beneficiaries. Your Will only handles the assets that are in your name alone at the time of your death, without joint owners or beneficiaries (referred to as "Probate Assets.") So, stating in your Will that you want to leave 10% of your assets to your church will only result on 10% of your Probate Assets being gifted to your church. If your intention is to leave a larger gift, you may want to consider naming the church as a beneficiary on a specific account or life insurance policy. Question (2): My financial advisor suggested I might want to consider using my retirement account for charitable gifting. Why should I consider that? Answer (2): Perhaps the biggest reason to consider leaving retirement assets to one or more charities has to do with your non-charitable beneficiaries' (i.e. children) income taxes. When a charitable organization is named as a beneficiary of your retirement account, the charity can generally take a tax-free distribution of the account balance after your death. In contrast, non-charitable beneficiaries are taxed at their ordinary income tax rates when they inherit retirement account assets. So, if you are trying to determine the best source for making charitable bequests after death, it may make sense to consider using your retirement account. In addition, as with other after-death transfers to charitable organizations, your estate may be eligible for an estate tax charitable deduction. Question (3): I've heard there is a certain amount of money that I can give to my children annually during my lifetime, without any tax consequences. What is that dollar amount, and how does it work? Answer (3): The current annual gift tax exclusion amount is $14,000. This means that a single taxpayer can give up to $14,000 per year to any number of people without incurring gift taxes, and married couples can give up to $28,000 per year to any number of people. This is in addition to the $5,450,000 lifetime federal unified exemption amount (unified credit for gift taxes, estate taxes and generation skipping transfer taxes for 2016.) People with large taxable estates sometimes find this annual gift tax exclusion amount helpful as a way to remove money from their taxable estate. Question (4): I may need to enter assisted living or receive nursing home care in the near future. Should I give away my assets to my children so I can qualify for medical assistance? Answer (4): Proceed with extreme caution!! If you anticipate that you may need to apply for medical assistance at some point, you need to be aware of the "penalty" period and provisions. This area is extremely complex, but at a very high level, anyone applying for medical assistance needs to meet certain income and asset limits in order to qualify. Any gifts or transfers of your assets made by you or your spouse for less than fair market value during the look-back period (currently the 60 months before you apply for medical assistance) could result in a period of ineligibility for medical assistance coverage for long-term care services. There are certain exceptions to the rules but, in general terms, gifting assets in order to reduce the size of your estate for medical assistance eligibility may not be in your best interest. Question (5): I frequently get requests for charitable donations from different organizations. How can I verify that an organization is legitimate? What other information should I find out before writing a check or naming a charity in my Will? Answer (5): Many organizations have names that sound very similar to other organizations; it can be tough to know whether you are dealing with the charity you think you are dealing with. The Better Business Bureau's "Wise Giving Alliance" webpage has a wealth of information for potential donors (, and the Minnesota Better Business Bureau created an information page specifically for senior citizens, providing some helpful tips to investigate charities ( Another useful tool is the GuideStar website (, which gathers and publicizes information about nonprofit organizations. Bottom line: do your homework to ensure the organizations you are supporting are legitimate. Other Ways to Gift Assets: The Q&A in this article only touched on the subject of charitable giving. There are many, many other wonderful ways to leave a charitable legacy, including the use of Charitable Gift Annuities, Wealth Replacement Trusts (Life Insurance Trusts), Charitable Remainder Trusts, Donor Advised Funds, and more. If you are interested in learning more about charitable giving, work with your attorney, financial advisor, and tax advisor to explore various options. Please note that this is not intended to be construed as tax or legal advice. Please consult with your tax professional, attorney and financial professional to discuss how to best accomplish your charitable giving goals.

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Cindy is an attorney in private practice in the Minneapolis/St. Paul metropolitan area, and a freelance writer. Having spent 19 years in the financial services industry in various operations and compliance roles, including 2 years as the Chief Compliance Officer for a federally-registered investment adviser owned by an accounting firm, Cindy loves to write about topics applicable to financial firms, accountants, law firms as well as general business pieces. Cindy has also had several parenting essays featured on the Huffington Post and
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