Welcome to this important guide from The Stejkowski Law Firm, LLC. Estate planning is often thought of as a way to provide for your family—but it can also be one of the most meaningful ways to give back to the causes and organizations you care about. By incorporating charitable giving into your estate plan, you can leave a lasting legacy while also taking advantage of valuable tax benefits.
In this article, we’ll walk through some of the most common strategies, including donor-advised funds, charitable trusts, and tax-efficient giving options, so you can make informed decisions about how to align your estate plan with your values.
Donor-Advised Funds (DAFs)
A donor-advised fund is like a charitable investment account specifically set aside for giving. You contribute money, receive an immediate tax deduction, and then recommend grants to your favorite charities over time.
DAFs are flexible, allowing you to support multiple organizations on your own schedule. They also provide an opportunity for your family to carry on your philanthropic goals—your children or other successors can continue recommending grants in your name. For many clients, this is an easy and efficient way to create an ongoing charitable impact without the complexity of setting up a private foundation.
Family Foundations
Although they are more complex, for families with larger estates or a strong desire to create a long-term charitable legacy, a family foundation may be the right option. A private family foundation is a nonprofit entity you establish to carry out charitable giving over generations. You retain control over how funds are invested and distributed, while also involving children and grandchildren in the decision-making process.
Family foundations can be tailored to support the causes you care most about, from local community organizations to international efforts. They also offer significant tax advantages, including deductions for contributions and the ability to avoid capital gains tax when donating appreciated assets. Perhaps most importantly, a foundation creates a structure for teaching future generations the values of philanthropy and stewardship, ensuring that your family’s charitable mission continues far beyond your lifetime.
Charitable Trusts
Charitable trusts are another powerful option for leaving a legacy while also providing potential financial benefits. There are two main types:
- Charitable Remainder Trusts (CRTs): You place assets into the trust, receive income during your lifetime, and the remainder goes to charity when the trust ends. This can reduce estate taxes and provide steady financial support for you or your loved ones.
- Charitable Lead Trusts (CLTs): The trust makes annual donations to charity for a set period of time, and when the trust ends, the remaining assets return to your beneficiaries. This strategy can help transfer wealth to the next generation at a reduced tax cost.
Both types of trusts allow you to balance personal financial security with your philanthropic goals.
Tax-Efficient Giving Strategies
Charitable gifts aren’t just generous—they can also be tax-smart. Some of the most effective approaches include:
- Gifting appreciated assets: Donating stocks or other investments that have increased in value allows you to avoid capital gains taxes while still receiving a deduction for the full fair market value.
- Qualified charitable distributions (QCDs): If you’re over age 70½, you can donate directly from your IRA to a qualified charity. This counts toward your required minimum distribution (RMD) and reduces taxable income.
- Bequests in your will or trust: You can designate specific charities to receive cash, property, or a percentage of your estate. This option is simple, flexible, and can be updated as your priorities change.
These strategies can reduce the tax burden on your estate, leaving more resources for both your loved ones and the causes you care about.
Why Charitable Giving Belongs in Your Estate Plan
Including charitable giving in your estate plan ensures that your generosity lives on. It allows you to:
- Support causes that reflect your values.
- Involve your family in a tradition of giving.
- Maximize the tax efficiency of your estate.
- Create a legacy that extends beyond financial inheritance.
By planning ahead, you can make a lasting difference for your community, your loved ones, and the organizations that matter most to you.
Charitable Giving in 2025 and What’s Changing in 2026
In 2025, charitable giving still benefits from established deductions, but under the newly enacted One Big Beautiful Bill (OBBBA), the landscape shifts significantly as of January 1, 2026. Itemizers will first need to exceed a floor of 0.5 percent of adjusted gross income (AGI) before any charitable deduction applies. At the same time, even high-income donors will be limited to a 35 percent deduction rate, down from the previous 37 percent. On the plus side, non-itemizers will regain an above-the-line deduction – up to $1,000 for individuals or $2,000 for married couples filing jointly, though this won’t apply when giving via donor-advised funds or private foundations. These changes underscore the importance of revisiting your giving strategy now, especially if you plan to “bunch” gifts or adjust the timing of contributions. Consult your tax professional to align your charitable plan with evolving law and maximize impact under the new provisions.
The Illinois Estate Tax Angle
For Illinois residents, charitable giving can play an even greater role. Unlike the large federal exemption, Illinois imposes its own estate tax with a much lower exemption of $4 million. This means many Illinois families with significant property, retirement accounts, or business interests could face a state estate tax bill even if they are well below the federal threshold. Charitable gifts can directly reduce the size of the taxable Illinois estate. In some cases, thoughtful charitable planning can eliminate the Illinois estate tax altogether, allowing more of your wealth to go to your family and your chosen causes instead of to the state.
Work With an Experienced Illinois Estate Planning Attorney
At The Stejkowski Law Firm, LLC, we believe your estate plan should reflect not only how you want to care for your family, but also how you want to impact the world. Whether you’re interested in setting up a donor-advised fund, exploring charitable trusts, or finding the most tax-efficient way to give, we can help you design a strategy that fits your unique goals.
Final Thoughts
Charitable giving through your estate plan is more than a financial decision—it’s a powerful way to define your legacy. By working with an experienced estate planning attorney, you can ensure that your generosity is carried out exactly as you intend while also providing important benefits for your family.
Contact The Stejkowski Law Firm, LLC today to discuss how charitable giving strategies can be incorporated into your estate plan and start building a legacy that lasts for generations.
