Charitable giving is a powerful way to leave a legacy, but when your heart is tied to more than one cause, figuring out how to split assets among multiple charities can be complex. Whether you wish to support education, healthcare, animal welfare, or religious organizations, having a smart estate plan can ensure your charitable goals are met effectively and efficiently.
At Allenby Law, we specialize in simplifying estate planning for San Diego residents, helping you navigate both the legal and emotional components of charitable giving. Here’s what you need to know if you’re considering dividing your estate among multiple charitable organizations.
Why Split Assets Among Charities?
Many individuals support multiple causes throughout their lives, so it’s only natural to want to continue that generosity through an estate plan. Splitting assets among charities allows you to:
- Reflect your diverse interests: Whether you’re passionate about climate change and education, or medical research and the arts, you don’t have to choose just one.
- Make a broader impact: Dispersing your assets strategically can support systemic change across various sectors.
- Honor different people or events: You may want to give in memory of a loved one, or in recognition of organizations that impacted your life.
Determine Your Charitable Intent
Before dividing anything, get clear on your intent. Ask yourself:
- Which causes matter most to me?
- Are there specific organizations I want to support?
- Do I want the funds used for specific purposes (e.g., scholarships, research, community outreach)?
- Do I want to make one-time donations or establish ongoing giving?
Clarifying your goals early makes your estate plan more effective and prevents future confusion for executors or trustees.
Legal Tools to Use
1. Charitable Bequests in a Will or Trust
You can name multiple charities as beneficiaries directly in your will or living trust. These bequests can be:
- Fixed dollar amounts (e.g., $50,000 to each organization)
- Percentage-based (e.g., 25% of your estate to Charity A, 25% to Charity B, etc.)
- Residuary gifts (e.g., whatever is left after other bequests)
Using a revocable living trust can also help you avoid probate, streamline administration, and maintain privacy.
2. Donor-Advised Funds (DAFs)
A DAF allows you to make a charitable contribution during your lifetime or at death, take an immediate tax deduction, and then recommend how to distribute the funds to multiple charities over time.
Benefits include:
- One central account
- Ability to change recipient charities
- Lower administrative burdens for your estate
3. Charitable Remainder Trusts (CRTs)
A CRT can provide income to your heirs or another beneficiary for a certain number of years, with the remainder going to one or more charities.
Advantages:
- Income tax benefits
- Support for heirs + charities
- Flexibility in choosing multiple charities as remaindermen
4. Payable-on-Death (POD) or Transfer-on-Death (TOD) Designations
You can name multiple charities as beneficiaries on bank accounts, brokerage accounts, or retirement assets. Be sure to:
- List charities by their full legal names
- Include tax ID numbers
- Specify percentages or amounts
Tax Considerations
Charitable donations can carry significant tax advantages if structured correctly:
- Estate tax deduction: Donations to qualified 501(c)(3) organizations are generally deductible from the estate’s gross value, reducing estate taxes.
- IRA or retirement account donations: These assets are often taxed heavily if left to individuals but pass tax-free to charities.
- Capital gains savings: Donating appreciated stock to charity can help avoid capital gains taxes while giving the charity the full market value.
It’s critical to coordinate with your estate planning attorney and tax advisor to make the most of these opportunities.
How to Avoid Common Pitfalls
1. Vague Instructions
Saying “split equally among my favorite charities” may not be legally enforceable. Be specific with names, percentages, and account numbers.
2. Failing to Update Documents
Organizations change names, merge, or dissolve. Review your estate plan regularly to ensure your selected charities are still valid and recognized.
3. Leaving Conflicting Instructions
Be careful not to leave different instructions in different documents. For example, if your will says one thing and your retirement account beneficiary designation says another, the latter usually takes precedence.
4. Overlooking Successor Beneficiaries
Always name a backup charity (or charities) in case one ceases to exist.
Coordinating with the Charities
Before finalizing your plan, consider reaching out to the charities you wish to support:
- Confirm their legal name and tax ID
- Inquire if they have gift planning departments
- Ask if they accept the type of gift you intend to give (real estate, stock, restricted funds, etc.)
Some organizations even offer recognition or naming opportunities for larger gifts, which can be meaningful to your legacy.
Working with Professionals
Successfully dividing your estate among multiple charities requires a coordinated effort between:
- Your estate planning attorney: To draft clear and enforceable documents
- Your financial advisor: To manage the assets and structure the distributions
- Your tax professional: To maximize charitable deductions and minimize tax liabilities
These professionals work together to ensure your plan not only meets legal requirements but also achieves your personal and philanthropic goals.
How We Can Help
At Allenby Law, we believe that estate planning should be both smart and simple. If you’re considering leaving part of your estate to multiple charities, our San Diego-based team can walk you through your options with clarity and care. We help you craft a plan that maximizes your impact, avoids unnecessary taxes, and honors your intentions—no matter how complex your goals may be.
Let us help you create a lasting legacy that reflects the full range of your values. Contact us today to schedule a personalized consultation.
