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Charitable Gifts and Your Estate Plan

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Charitable giving

Charitable gifts are important to many of our clients. We encourage charitable inclinations, of course. But how can you make a gift to your favorite charity most efficiently?

Lifetime charitable gifts

Of course, one way to make a gift is to write a check. It’s direct, it’s immediate — and it’s very much appreciated.

Making such a gift can also have a positive effect on your personal income tax liability. Your charitable gift is deductible on your tax return. But fewer and fewer people itemize their deductions, and so that $100 gift to your local public radio station might not reduce your income tax at all.

Oh, wait. That’s not quite correct. Even people who don’t itemize can deduct up to $300 in charitable gifts before applying their standard deduction. So your $100 gift is saved!

Not quite. That was the 2021 rule, applicable to the tax return most people just got through filing two weeks ago. The rule has not (yet) been extended to 2022, so if you make the gift today it might not be deductible. And even if the rule does get extended, a $1,000 gift will only be partially deductible.

But that doesn’t mean that there is no income tax benefit available. There are a number of strategies for deducting (especially larger) charitable gifts in particular circumstances.

“Bunching” gifts

One way to get better income tax treatment (for some people) is to make more gifts in alternate years. If you are close to itemizing deductions, you can make larger gifts in that year and take a breather in the “off” years.

But that doesn’t work all that well for most people. It requires too much planning, and too much serendipity. And don’t take the suggestion as permission to forego those important charitable gifts this year.

One way to effectively bunch charitable gifts: consider a donor advised fund. For some taxpayers, a charitable gift annuity or charitable remainder trust may be an alternative approach, providing a stream of income from your gift even as it allows a charitable income tax deduction.

State income tax deductions

Though the tax rates are almost always lower, there is one tax concept to keep in mind. Your charitable gifts might be deductible on your state income tax return even if they are not deductible on the federal level. And if you’re an Arizona taxpayer, at least, you may actually get a tax credit for at least some gifts.

That can mean that your state tax liability is reduced, dollar for dollar, for those qualified gifts. You are effectively having the State make your gifts for you. Deductibility on the federal level is no longer important — which is a good thing, because the federal government won’t let you deduct gifts that cost you nothing.

Qualified Charitable Distributions

Another important strategy works well for people who have to take a minimum distribution from their retirement accounts. It’s easy to direct that distribution straight to a charity, and then you avoid federal (and Arizona state) taxation on that distribution.

We discussed the concept in one of our podcast episodes a few months ago. There is a lot of information about this tax-wise approach out there. Though the strategy doesn’t offer an income tax deduction, it does even better. It keeps income that you would otherwise have to report completely off your income tax return.

Want some other, more complicated ideas? They tend to be possibilities for wealthier taxpayers who are also big donors, but there are other ways to make tax-wise charitable gifts.

Gifts in your estate

Though your estate doesn’t get an income tax deduction for charitable gifts, it does get a deduction from estate tax liability. Of course, your estate generally will not have any federal estate tax due unless it exceeds $12 million, so gifts may not provide much tax benefit for most people’s estates.

But won’t your estate’s beneficiaries get a benefit from your charitable bequests? No, they won’t. Unless, that is, you leave them money and they turn around and make a charitable gift from their inheritance. But you can’t require them to make that gift.

It’s still a good idea to consider charitable gifts as part of your estate plan. One prime category: naming a charity as beneficiary of your Individual Retirement Account (IRA), 401(k) plan or other retirement plan.

If you leave your IRA to your daughter, for instance, she’ll pay income tax on the withdrawals she makes. And in most circumstances, she’ll have to take those distributions over the next ten years. And since your daughter is a highly-paid physician, her tax liability will be high.

Leaving that IRA to a charity won’t put any of the proceeds in your daughter’s hands. But it will mean more to the charity than it would to her. So if you’re thinking about making charitable gifts anyway, your retirement account might be the best source to consider. And, of course, you could name two or three (or sixteen) charities as beneficiaries.

Other ideas

Still interested in tax-wise charitable giving? There are a number of options to consider. We can talk about charitable remainder trusts, charitable lead trusts, and donor advised funds. Each of these can be set up now, and funded immediately or at your death. They make it easier to carry out your charitable inclinations while considering — and perhaps minimizing — income taxes.

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

Famous people's wills

Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.