Everyone has three primary types of capital in their estate – legacy capital which will be passed on to heirs, social capital which goes to society, and personal capital which supports a lifestyle. For the majority of individuals doing their estate planning, their social capital would go to the IRS and the US government is then responsible for determining how it is used.
Many people are under the impression that if they leave money to a charity when they pass away that it will minimize their family’s inheritance. However, if you work with an experienced estate planning attorney, you can incorporate philanthropy in your estate planning and in many cases, redirect money that might currently be directed to the IRS due to lack of planning back to your family and charities that you care about.
Advanced planning can be extremely valuable in this situation because the timing of a charitable bequest can make a big difference for everyone involved. Consulting with your estate planning attorney about the charities that you intend to support is strongly recommended.