The Difference Between Giving and Planning
A check at the end of the year. A bequest in the will. A donation in someone's memory. That is giving, and it matters. But it is not planning.
Charitable planning is the process of integrating your giving goals into your broader estate plan in a way that is intentional, tax-efficient, and built to last. Done well, it lets you give more to the causes you care about, reduce your tax burden, and leave a legacy that reflects what actually mattered to you. Tom Wolff works with Kansas City families to build giving strategies that are practical, coordinated with their estate plans, and structured to make the most of every dollar they intend to give.
Charitable Giving Strategies
There is no single right way to give. The best approach depends on your goals, your assets, your tax situation, and how involved you want to be in the giving process. We work with clients to identify the strategies that fit their situation - not the most complex option, but the right one.
Charitable Bequests
A bequest in your will or trust directs a specific amount, a percentage of your estate, or a particular asset to a charity at your death. It is the simplest form of planned giving, requires no action during your lifetime, and can be changed at any time as long as you update your documents.
Qualified Charitable Distributions (QCDs)
If you are 70½ or older, you can transfer up to $105,000 per year directly from your IRA to a qualified charity. The distribution counts toward your required minimum distribution but is excluded from your taxable income - making it one of the most tax-efficient ways to give for retirees with IRAs.
Donor-Advised Fund (DAF)
A donor-advised fund allows you to make a charitable contribution now, take the tax deduction immediately, and recommend grants to specific charities over time. It is a flexible, low-cost alternative to a private foundation - ideal for families who want to involve the next generation in their giving decisions.
Charitable Remainder Trust (CRT)
A charitable remainder trust pays income to you or your beneficiaries for a period of time, then transfers the remaining assets to charity. It can reduce estate taxes, provide an income stream, and allow you to give appreciated assets without triggering immediate capital gains tax.
Beneficiary Designations
Naming a charity as the beneficiary of an IRA or retirement account is one of the most tax-efficient charitable strategies available. Because charities are tax-exempt, they receive the full value of the account - whereas individual beneficiaries pay income tax on distributions. This frees up other assets to pass to family members tax-free.
Private Foundations
For families with significant assets and a long-term commitment to philanthropy, a private foundation provides maximum control over giving decisions, the ability to employ family members, and a lasting institutional presence. We work with clients to evaluate whether a foundation is appropriate and coordinates with tax counsel on the setup and compliance requirements.
How Charitable Planning Fits Into Your Estate Plan
Charitable planning is not a separate exercise - it is part of a complete estate plan. The most effective giving strategies are those that are coordinated with your other documents: your trust, your will, your beneficiary designations, and your retirement accounts. Heirloom ensures that your charitable goals are reflected consistently across all of your estate planning documents, so that your giving intentions are carried out exactly as you intend.
This also means thinking about the order of giving. Retirement accounts are often the worst assets to leave to family members (because of the income tax) and the best assets to leave to charity (because charities pay no tax). Meanwhile, appreciated securities and real estate are often better given to charity during your lifetime, where you can avoid capital gains tax on the appreciation. These are the kinds of coordinated decisions that make charitable planning valuable - not just the choice of which charity to support.
Who This Is For
Qualified charitable distributions are one of the most tax-efficient giving strategies available to retirees. If you are 70½ or older and plan to give to charity, this conversation is worth having before you take your next required minimum distribution.
If you own appreciated stock, real estate, or a business interest and plan to give to charity, the timing and structure of that gift can significantly affect how much the charity receives and how much you owe in capital gains tax.
A donor-advised fund, a charitable trust, or a private foundation can extend your giving beyond your lifetime and involve your children and grandchildren in the process. We help families think through what kind of legacy they want to leave and how to structure it.
If you already have a bequest to charity in your will or trust, Heirloom can review whether there is a more tax-efficient way to accomplish the same goal - one that gives more to the charity and more to your family at the same time.
Frequently Asked Questions
What is the most tax-efficient way to give to charity?
It depends on your situation. For retirees with IRAs, qualified charitable distributions are often the most efficient option. For people with appreciated assets, donating the asset directly (rather than selling it and donating the proceeds) avoids capital gains tax. For larger gifts, a donor-advised fund or charitable remainder trust may be appropriate. We can help you identify the right approach based on your specific assets and tax situation.
Can I change my charitable giving plans after I set them up?
It depends on the structure. A charitable bequest in a will or trust can be changed at any time as long as you update the document. A donor-advised fund allows you to change your grant recommendations at any time. A charitable remainder trust, once established, is generally irrevocable. We explain the flexibility of each option before you commit to any structure.
Should I leave my IRA to charity or to my children?
From a pure tax efficiency standpoint, IRAs are often better left to charity and other assets (like appreciated real estate or a taxable brokerage account with a stepped-up basis) are better left to family. This is because charities pay no income tax on IRA distributions, while individual beneficiaries must pay income tax on every dollar they withdraw. The right answer depends on your family's tax situation, but this is one of the most common and impactful planning decisions We help clients make.
Do I need a private foundation, or is a donor-advised fund enough?
For most families, a donor-advised fund provides the flexibility, tax benefits, and family involvement of a private foundation without the administrative burden, minimum distribution requirements, and compliance costs. Private foundations make sense for families with very significant assets and a long-term institutional commitment to philanthropy. We help clients evaluate which structure fits their goals and their capacity to manage it.