How to Leave a Legacy: Charitable Giving in Your Estate Plan

September 26, 2025
Jana Lamanna
Jana Lamanna

Jana Davis Lamanna is experienced in the areas of probate/trust/estate litigation, divorce/family law, probate administration, estate planning, guardianship and conservatorship law, and assisted reproductive technology law.

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When people think of an estate plan, often the focus is on providing for the family, minimizing taxes, and avoiding probate. But many also wish to leave a meaningful legacy, a gift to a cause, organization, or mission they care about. Thoughtfully including charitable giving in your estate plan allows your values to endure beyond your lifetime.

In Tennessee, as elsewhere, the key is combining your philanthropic goals with sound legal structure, respecting both federal tax rules and Tennessee’s specific laws and requirements. This article walks you through the why, the how, and practical considerations for charitable legacy planning in Tennessee.

Why Include Charitable Giving in Your Estate Plan?

Charitable giving as part of your legacy offers several important benefits:

  1. Make a lasting impact
    You support causes you believe in – education, health, arts, social services, faith institutions, community development, etc.
  2. Tax and estate benefits
    Properly structured gifts can reduce the taxable value of your estate, yield income tax deductions (while living), or help mitigate capital gains taxes. 
  3. Balance family & philanthropy
    You can provide for heirs while still designating a portion of your estate for charity, striking a balance between personal legacy and family provision.
  4. Clarity and peace of mind
    A clear plan ensures your charitable intent is honored, avoids confusion or conflict among heirs, and gives you confidence your legacy will be carried out.

Core Steps to Leave a Charitable Legacy

To leave a charitable legacy in your estate plan, define your philanthropic goals, choose from giving methods like bequests, beneficiary designations, donor-advised funds, or charitable trusts, and then work with estate planning professionals to formally integrate these gifts into your will or other documents.

Below is a more detailed guide to that process –

Common Charitable Giving Methods (and How They Work in Tennessee)

Here are some of the principal vehicles you can use to incorporate charitable gifts into your estate:

Method

Description / How it Works

Key Benefits & Considerations in Tennessee

Bequest in Will or Living Trust

You specify in your will or trust that a set dollar amount, a percentage, or a specific asset (real property, securities, etc.) goes to charity on death.

Simple and flexible. Especially good for donors who want to retain control during life. In Tennessee, it must be clear who is the charitable recipient.

Beneficiary Designation

You name a charity as the beneficiary of retirement accounts (IRA, 401(k), etc.) or life insurance.

The asset passes outside of probate. In many cases charitable beneficiaries are not subject to income or estate taxes. Care must be taken under current federal rules (e.g., SECURE Act rules for IRA distributions).

Donor-Advised Funds (DAFs)

You contribute to a public charity that sponsors a DAF; you get a tax deduction when you donate and then advise how the funds are distributed over time.

Flexible giving over time, immediate deduction (subject to IRS limits). Many philanthropic planners use DAFs as a middle ground between outright gifts and more complex trusts.

Charitable Trusts (e.g., Charitable Remainder Trusts (CRTs), Charitable Lead Trusts (CLTs))

You transfer assets into a trust that provides income to you (or others) during a term; remainder goes to charity (CRTs). Or, a trust provides income to charity for a time, then passes remainder to heirs (CLTs).

More complex but offers tax advantages, ability to convert appreciated property, manage cash flows, and reduce estate/gift tax burden.

Charitable Gift Annuities

You donate a lump sum to a qualified charity, and in return receive a fixed annuity payment for life; after you pass, the remainder stays with the charity.

In Tennessee, these are regulated under Tennessee’s Charitable Gift Annuity Act of 2008, including requirements for separate accounts and reserve levels. (Justia Law)

Tennessee-Specific Legal Considerations & Pitfalls

Tennessee-Specific Legal Considerations & Pitfalls

When planning charitable gifts in Tennessee, certain state laws and legal precedents are especially relevant. Make sure to keep these in mind:

1. Conditional Gifts and Restrictions Must Be Honored

Under Tennessee law (T.C.A. § 35-13-103), if you make a charitable gift with conditions (e.g., “this gift must fund scholarships” or “must be used to build a new wing”), the gift instrument controls how the charity must use the funds. If the charity fails to honor those restrictions, the donor (or the donor’s estate) may have recourse. 

Thus, if you include restrictions or conditions, be careful to draft them clearly and meaningfully.

2. Gift Annuity Requirements

As noted above, Tennessee law requires that charities offering gift annuities maintain separate accounts for those annuities and meet certain reserve requirements (e.g., assets in the account must equal at least the donations less payments, or 110% of certain reserves) to protect annuitants.
This protects donors but also imposes compliance burdens on the charitable organization.

3. No State Capital Gains Tax in Tennessee

Tennessee does not levy a state income or capital gains tax on individuals (beyond limited interest/dividend tax with the Hall income tax sunset). Thus, donating appreciated securities or real property generally avoids federal capital gains tax but does not gain additional state tax savings. This makes strategies that reduce federal capital gain exposure more attractive.

4. Estate & Gift Tax Context

Currently, Tennessee does not impose a state-level estate tax or inheritance tax. That means you’re dealing primarily with the federal estate tax regime in structuring your charitable giving. (Always verify the federal estate tax exemption in force at your date of death.)
Because there’s no state estate tax, charitable bequests become a more direct way to reduce the federal taxable estate.

5. Flexibility & Alternate Beneficiaries

Because charities may change or cease operations over time, it’s wise to include fallback or contingent provisions. For example: “If Charity A no longer exists or cannot use it for the intended purpose, then use Charity B or let my executor designate a similar charity.”
This kind of flexibility helps ensure your gift is still useful even many years later.

6. Coordination with Overall Estate Plan

Your charitable giving must fit logically with your will, trusts, powers of attorney, and other estate mechanisms under Tennessee probate law. For instance, if your will already includes a residuary clause (what to do with leftover assets), make sure the charitable gift does not conflict with other bequests. Also, ensure beneficiary designations (e.g. on retirement accounts) align with what your will or trust says.
The University of Tennessee Gift Planning program, for example, provides sample bequest language to facilitate coordination.

Sample Roadmap: How to Incorporate Charitable Giving into Your Tennessee Estate Plan

Here is a step-by-step guide to embedding your philanthropic legacy effectively:

  1. Clarify your philanthropic vision
    Decide what causes, organizations, or impact you want to support; whether you prefer local (Tennessee) or national charities.
  2. Analyze your assets and tax profile
    Examine which assets (cash, real estate, appreciated securities, retirement accounts) may be best suited for charitable gifts, and what your federal estate tax exposure may be.
  3. Select giving mechanisms
    Choose among bequests, beneficiary designations, DAFs, charitable trusts, gift annuities, or hybrid approaches.
  4. Include fallback and flexibility clauses
    Provide alternatives in case charities change or cease to function.
  5. Draft the documents
    Work with a Tennessee estate planning attorney to integrate your charitable gifts into your will, trusts, beneficiary forms, and related legal documents.
  6. Coordinate timing and funding
    For some gifts (trusts, DAFs), funding may occur during your lifetime; others take effect at death. Be sure funding and titling are properly arranged.
  7. Review and update periodically
    Over time, your relationships, charitable priorities, tax laws, and the status of charities may change. You should review your plan every few years to ensure it still accomplishes your goals.

Why Work with a Tennessee Estate / Probate Attorney?

Charitable giving in an estate plan is rewarding – but it can also be legally intricate. Here is what an experienced Tennessee estate planning lawyer (particularly one familiar with probate and tax law) brings to the table:

  • Ensure your intended charitable gifts comply with both federal tax/estate law and Tennessee statutes (e.g. charitable gift annuity regulations, condition enforcement).
  • Draft clear, robust, and flexible trust or will provisions (including fallback clauses) that avoid ambiguity or conflict.
  • Help you identify which assets are optimal to give (e.g. gifting appreciated property vs. cash).
  • Coordinate charitable giving with your overall estate plan, ensuring consistency across wills, trusts, beneficiary designations, and powers of attorney.
  • Stay updated on changes in tax law, charitable IRS rules, and Tennessee legal developments.
  • Assist in communicating and working with the charitable organizations you choose (ensuring they can accept the gift form, comply with required restrictions, etc.).
charitable legacy

Closing Thoughts

Leaving a charitable legacy is a powerful way to continue making a difference, even after you’re gone. In Tennessee, the absence of a state estate tax simplifies part of the equation, but you still must navigate federal tax rules, Tennessee statutes (such as the Tennessee Charitable Gift Annuity Act), and proper drafting to ensure your gifts are honored and protected.

If you’re ready to turn your philanthropic vision into a lasting legacy, we at TN Probate Lawyer stand ready to help – drafting, coordinating, and reviewing your estate plan to include meaningful charitable giving.

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Black McLaren Jones Ryland & Griffee, P.C.

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