You can structure charitable giving through your Massachusetts estate plan in several ways, ranging from a simple bequest in your will or trust to more advanced tools like a donor-advised fund, a charitable remainder trust, or a charitable lead trust.
The right structure depends on three questions: do you want to give during life or at death, do you need income from the assets, and are you trying to cut income tax, estate tax, or both. Charitable gifts also pass free of Massachusetts estate tax, which can matter for families near the state’s $2 million threshold.
What Are Your Options for Charitable Giving in an Estate Plan?
At a high level, you can give in four ways, each with a different tax and control profile:
- A bequest in your will or trust, which takes effect at death.
- A donor-advised fund, a charitable account you fund now and grant from over time.
- A charitable trust, either a remainder trust or a lead trust, which splits benefits between your family and charity.
- Direct gifts from retirement accounts, which carry unique income tax advantages.
Most families use a combination, matching the tool to the goal rather than hunting for a single “best” option.
How Does a Charitable Bequest Work?
A charitable bequest is a gift to a charity written into your will or trust. It is the simplest form of planned giving and the most common.
You can leave a specific dollar amount, a percentage of your estate, or whatever remains after your family is provided for. You keep full use of the assets during your lifetime and can change your mind at any time.
When you die, the gift qualifies for an unlimited estate tax charitable deduction, so the amount you give is removed from your taxable estate entirely. A bequest is often the starting point for charitable planning within an estate plan.
What Is a Donor-Advised Fund?
A donor-advised fund (DAF) is a charitable account you open through a sponsoring organization. You contribute cash or appreciated assets, take an immediate income tax deduction, and then recommend grants to charities over time.
A DAF appeals to families who want:
- An immediate income tax deduction, up to 60% of adjusted gross income for cash gifts and 30% for appreciated assets like stock.
- To avoid capital gains tax by donating appreciated securities directly rather than selling them first.
- Simplicity and flexibility, granting to different charities each year without administering a private foundation.
The trade-off is that a DAF does not reduce your taxable estate the way a bequest or charitable trust does, because you have already given the assets away during life. It is primarily an income-tax and convenience tool, not an estate-tax tool.
How Do Charitable Remainder and Charitable Lead Trusts Work?
Charitable trusts are “split-interest” arrangements: part of the value goes to your family and part to charity. The two types run in opposite directions.
A charitable remainder trust (CRT) pays income to you or your beneficiaries first, then gives the remainder to charity. You transfer assets into the irrevocable trust, receive an income stream for life or for a term of up to 20 years, and the charity receives what is left. Because the trust is tax-exempt, it can sell appreciated assets without an immediate capital gains hit, and you get a partial income tax deduction up front. The IRS requires the projected charitable remainder to be at least 10% of the value contributed.
A charitable lead trust (CLT) does the reverse: it pays income to charity for a set term, then passes the remaining assets to your heirs. A CLT is used to move assets to the next generation at a reduced gift or estate tax cost while supporting charity in the meantime.
| Feature | Charitable Remainder Trust | Charitable Lead Trust |
| Who gets income first | You or your family | The charity |
| Who gets the remainder | The charity | Your heirs |
| Best for | Income for life plus a charitable legacy | Passing assets to heirs at reduced transfer tax |
| Immediate income tax deduction | Partial, based on the charitable remainder | Available with a grantor CLT |
| Avoids capital gains on appreciated assets | Yes, the trust is tax-exempt | No |
Both are irrevocable and require careful drafting, so they suit families with appreciated assets or larger estates and a genuine charitable intent. Our trust planning team builds these to coordinate with the rest of your plan.
Can I Give from My IRA to Save Taxes?
Yes, and for many retirees it is the most tax-efficient gift available. If you are 70½ or older, you can make a qualified charitable distribution (QCD), sending money directly from your IRA to a qualified charity.
The advantages are specific:
- The distribution is excluded from your taxable income, which can beat a deduction.
- It counts toward your required minimum distribution for the year.
- The annual QCD limit is indexed for inflation and was $108,000 per person in 2025, rising in later years.
Because IRAs are among the worst assets to leave to heirs from a tax standpoint, they are often the best assets to give to charity.
How Does Charitable Giving Cut Your Massachusetts Estate Tax?
Massachusetts taxes estates over $2 million, and the tax applies to the entire estate once you cross that line, with rates up to 16%.
Charitable gifts, whether a bequest at death or assets moved into a charitable trust, are removed from your taxable estate. For a family sitting just above $2 million, a planned charitable gift can lower the taxable estate and reduce or eliminate the state tax, sending money to a cause you support rather than to the Department of Revenue.
Two 2026 developments matter on the income tax side.
Under the One Big Beautiful Bill Act, itemized charitable deductions are now subject to a 0.5% of adjusted gross income floor, and the deduction’s value for top-bracket taxpayers is slightly reduced.
There is also a new deduction for people who do not itemize: up to $1,000 for single filers and $2,000 for joint filers for cash gifts to public charities, though it does not apply to donor-advised funds. These changes affect the timing and structure of gifts, one more reason to coordinate charitable giving with your overall plan.
Frequently Asked Questions
Do charitable gifts reduce Massachusetts estate tax?
Yes. Assets left to charity are removed from your taxable estate. Because Massachusetts taxes estates over $2 million on the entire value, a charitable gift can lower or eliminate the state tax for families near the threshold.
What is the difference between a donor-advised fund and a charitable trust?
A donor-advised fund gives you an immediate income tax deduction and simple grant-making but no ongoing estate tax benefit. A charitable trust splits value between your family and charity and can provide income or reduce transfer taxes.
Should I leave my IRA to charity or to my children?
Retirement accounts are heavily taxed when left to individuals. Leaving an IRA to charity, or using qualified charitable distributions during life, is often more tax-efficient, while other assets pass to your children with a step-up in basis.
Do I need to be wealthy to include charity in my estate plan?
No. A simple bequest costs nothing to add and can reduce Massachusetts estate tax for a family just over $2 million. Charitable planning scales to any estate size.
Build Charitable Goals Into Your Plan the Right Way
Charitable giving in an estate plan should serve both your values and your tax picture. The tool that fits a retiree with an IRA is not the tool that fits a family with a highly appreciated stock portfolio, and the 2026 rule changes make coordination more important than ever.
To structure charitable giving that supports the causes you care about and reduces your Massachusetts estate tax, contact us to schedule a consultation. We help families across the Merrimack Valley and North Shore, including Andover, North Andover, Reading, North Reading, and Middleton, give thoughtfully and efficiently.