Estate planning is not just about distributing assets to family members—it also offers an opportunity to support charities and causes that reflect your values. Whether you want to leave a legacy through a local nonprofit, establish a scholarship fund, or contribute to a national organization, Illinois law provides several estate planning tools to ensure your philanthropic goals are met. At Orlowsky & Wilson, we help clients incorporate charitable giving into their estate plans while ensuring compliance with Illinois estate planning laws.
Charitable giving can take many forms, from direct donations to more complex arrangements such as charitable remainder trusts or donor-advised funds. Under Illinois law, gifts made through an estate plan can qualify for estate tax deductions, reducing the taxable value of an estate.
Common charitable giving strategies include:
Under 35 ILCS 405/2, Illinois estate tax laws allow deductions for charitable contributions, helping minimize estate tax liabilities while supporting charitable causes.
When incorporating charitable giving into an estate plan, several factors should be considered. These factors may include tax benefits, financial impact, and legal requirements. Some key questions might include:
Proper estate planning ensures that your wishes are legally documented and carried out effectively.
Charitable giving can provide significant federal and Illinois state tax benefits. Under Section 170 of the Internal Revenue Code, donations to qualified 501(c)(3) organizations may be deductible for federal income tax purposes. Additionally, under 35 ILCS 405/2, Illinois estate tax laws allow for charitable deductions, reducing the taxable value of an estate.
Some tax advantages of charitable giving include:
By strategically structuring charitable gifts, donors can maximize tax savings while supporting their favorite causes.
Failing to properly structure charitable contributions can lead to unintended tax consequences or disputes among beneficiaries. Common mistakes include:
Proper legal guidance ensures that charitable giving intentions are legally enforceable and beneficial for all parties involved.
There are several ways to include charitable giving in an estate plan, including bequests in a will, charitable trusts, donor-advised funds, and charitable gift annuities. The best approach depends on financial goals and tax considerations.
Yes. Under 35 ILCS 405/2, Illinois allows estate tax deductions for charitable contributions, reducing the taxable value of an estate. Federal law also provides income and capital gains tax benefits for certain donations.
Yes. Charities often accept real estate donations, which can provide tax benefits and eliminate maintenance responsibilities. A charitable remainder trust (CRT) can be used to provide income before transferring the property to a charity.
A charitable remainder trust (CRT) provides income to beneficiaries before the remaining assets are donated to charity. A donor-advised fund (DAF) allows individuals to make tax-deductible contributions and distribute funds to charities over time.
A charitable gift annuity provides fixed lifetime payments to the donor in exchange for a donation. Upon the donor’s passing, the remaining funds are transferred to the charity.
Yes. Naming a charity as a beneficiary of an IRA or 401(k) can eliminate income and estate taxes that would otherwise be owed by heirs.
It is not legally required, but informing a charity about planned donations ensures they can properly prepare to receive the gift and acknowledge the contribution.
Charitable giving can provide lasting benefits for causes you care about while offering significant tax advantages. At Orlowsky & Wilson, we help clients structure estate plans that reflect their values and financial goals.
Contact our Lincolnshire estate planning lawyers at Orlowsky & Wilson (847) 325-5559 to schedule a consultation. We represent clients throughout Lincolnshire and the greater Chicago area.
