Implementing Charitable Giving in Your High-Net-Worth Estate Plan

 Posted on May 22, 2025 in High Net Worth Estate Planning

Including charitable giving in a high-net-worth estate plan is a priority for many. It allows you to support causes that are important to you while also activating tax benefits for you and your heirs. If using your wealth to give back matters to you, an experienced Rockville, MD estate planning attorney can offer advice and legal guidance to ensure your estate plan adequately reflects how you would like to distribute your wealth.

Reducing Your Taxable Estate in Maryland by Giving Directly

Giving directly to qualifying organizations can reduce your taxable estate. The IRS explicitly states that only qualified organizations trigger tax deductions for charitable contributions. Gifts to individuals do not count. Philanthropic donations to nonprofits can include gifting financial assets like cash or retirement accounts. Gifts given while you are alive may entitle you to a deduction in income tax, and donations made after your death will remove assets from your taxable estate. 

Gifting tangible assets, such as real estate, jewelry, antiques, and more during your lifetime also reduces your income tax responsibility. Still, the size of the benefit will depend on the federal laws that apply to specific charitable donations. Tangible gifts donated after death, typically through a trust or will, will often reduce the value of your estate by an amount equal to the fair market value of the property you donated.

Using Life Insurance for Charitable Giving in Your Estate Plan

A lesser-known fact is that you can also use life insurance policies for charitable donations. Some benefits of gifting a life insurance policy include:

• Donating a policy to a nonprofit while you are alive removes it from your taxable estate and gives it to the organization tax-free when you pass away. 

• Premiums you pay during your lifetime are typically tax-deductible as well.

• A life insurance policy is often a significantly larger donation than other examples of charitable giving.

If you would like to divide the death benefit of a life insurance policy among your heirs and a nonprofit, you can name them as beneficiaries. It allows you more control over the gifting process. You will not receive the charitable deduction from your income tax, and the proceeds from the death benefit will be taxed as part of your estate. However, the portion of the benefit that the charity receives should still get the estate tax deduction.

Using Advanced Trusts To Leave a Legacy in Maryland

Charitable lead and charitable remainder trusts offer benefits that can reduce the size of your estate while also establishing your legacy. A charitable lead trust donates income to a charity for a set amount of time while preserving assets for your heirs. The charitable remainder trusts serve as income for you or your heirs for a term before donating what is left of the trust to a charity of your choosing.

Schedule a Free Consultation With a Silver Spring, MD High-Net-Worth Estate Planning Attorney

As a high-net-worth individual, your estate plan should reflect your values, and including charitable giving to causes that matter to you is a great way to do that. When you work with the Rockville, MD high-net-worth estate planning lawyer at The Eleff Law Group, your wishes for your estate are carefully implemented into an enforceable plan. Call 301-857-1990 to schedule your free consultation today.