Michigan Charitable Bequests: Leaving a Gift Without Sacrificing Family

More than half of Americans say they would like to leave money to a charity in their estate plan -- but only about 6% actually do. The reason is not greed; it is friction. Most people think they need a lawyer, a 30-page trust, or a six-figure estate to do it properly. None of that is true in Michigan. A single sentence in your will can direct $5,000 to your church. A two-minute beneficiary form update on an IRA can give an entire retirement account to your favorite nonprofit -- with the charity receiving 100 cents on the dollar while your other heirs get a far better tax outcome on the rest of your estate. This is the DIY guide to charitable bequests in Michigan, without the planned-giving brochure fluff.

Why Pick the Right Asset Matters

Here is the secret almost nobody mentions outside of CPA offices: not all dollars are taxed equally when your heirs inherit them. A $100,000 traditional IRA inherited by your adult child gets taxed as ordinary income at their tax rate -- which means depending on their bracket, $20,000 to $35,000 of it goes to federal income tax. A $100,000 brokerage account inherited by your child gets a "step-up in basis" -- they can sell it the next day and pay $0 in capital gains tax. Same dollar amount, completely different outcome.

Charities, on the other hand, pay zero income tax on either. As the Community Foundation for Northeast Michigan explains, "60-70% of your retirement assets may be taxed if you leave them to your heirs at your death. Another option is to leave your heirs assets that receive a step up in basis, such as real estate and stock, and give the retirement assets to the charity."

Translation: if you want to leave $50,000 to your church and $50,000 to your kids, leave the IRA to the church and the brokerage account to the kids. Same total. Wildly different tax bills. Michigan does not have a state estate tax to layer on top of this, but federal income tax on retirement distributions still matters a lot to middle-class heirs.

Five Ways to Leave a Charitable Bequest

1. Specific dollar amount

"I give the sum of $5,000 to St. Mary's Catholic Church of Wyandotte, Michigan." Easy to draft, easy to execute. Risk: if your estate shrinks before death, the charity still gets its full amount and your family gets less of the residue. Use for small, set amounts.

2. Specific asset

"I give my 2018 Toyota Camry to Habitat for Humanity Detroit." Or a stock certificate, piece of real estate, or art. Risk: if you no longer own the asset at death, the gift fails entirely (a doctrine called ademption). Good for sentimental, identifiable items.

3. Percentage of estate

"I give 10% of my residuary estate to the Detroit Public Library Foundation." Self-balancing -- if the estate grows or shrinks, charity and family scale together. The best option for most middle-class Michigan donors.

4. Residuary bequest

"I give the residue of my estate to Hospice of Michigan." Charity gets whatever is left after specific bequests, debts, and expenses. Use when you want the charity to be the final beneficiary after family.

5. Beneficiary designation (best for retirement and insurance)

Skip the will entirely. On your IRA, 401(k), or life insurance beneficiary form, list the charity as primary or contingent. The funds transfer directly without ever entering probate. Per CFNEM's guide: "If you designate the charity as beneficiary, the charity will benefit from the full value of your gift because your IRA assets will not be taxed at your death." This is, dollar for dollar, the most efficient way to give.

Bequest Language for Your Michigan Will

The CreateMIWill Will Kit Michigan template already includes a charitable bequest section. If you are using your own form, here are the standard clauses:

Specific dollar bequest

I give the sum of [$ Amount] to [Full Legal Name of Charity], a [State] nonprofit organization, federal tax identification number [EIN], with its principal office at [Address], to be used for its general charitable purposes.

The "general charitable purposes" phrase is critical -- it lets the charity use the funds where they are needed most, rather than restricting them to a program that may not exist by the time you die.

Percentage of residuary estate

I give [X percent] of my residuary estate to [Full Legal Name of Charity], a [State] nonprofit organization, federal tax identification number [EIN], with its principal office at [Address], to be used for its general charitable purposes. If said charity is not in existence at my death, I give this gift to a successor organization with substantially the same purposes, as determined by my Personal Representative.

The successor language matters. Charities merge, dissolve, or change names. Without a fallback, the bequest may fail and the funds pour back into your residue.

Contingent bequest (only if family is already provided for)

If my spouse and all of my descendants predecease me, I give the residue of my estate to [Full Legal Name of Charity]...

Use this when you want to make sure family is taken care of first but you do not want assets going to distant relatives or escheating to the state if everyone in your direct line predeceases you.

Why IRA Beneficiary is the Best Option

If you want to give $25,000+ to charity and you also have an IRA, doing it through the IRA beneficiary form is almost always the most tax-efficient path. The math:

• Your kid inherits the $25,000 IRA: they pay roughly $5,500 in federal income tax (assuming 22% bracket), and the SECURE Act forces them to drain the account in 10 years, often pushing them into higher brackets. They net somewhere around $19,000.
• Charity inherits the $25,000 IRA: tax-exempt charity pays $0. Gets the full $25,000.
• Your kid inherits a $25,000 brokerage account instead: steps up in basis. They sell the day after they receive it and pay $0 in tax. They net $25,000.

By swapping which heir gets which account -- through a free beneficiary form change -- you boost charity by $6,000 AND boost your kid by $6,000. Same total estate. The IRS is the only loser.

How to update the IRA beneficiary form

1. Log into your IRA custodian's website (Fidelity, Vanguard, Schwab, etc.).
2. Find the beneficiary or "designated beneficiaries" section.
3. Add the charity by full legal name and federal tax ID (EIN). Most charities publish their EIN on their planned-giving page; the IRS Tax Exempt Organization Search (apps.irs.gov/app/eos) also lists it.
4. Specify a percentage. You can list multiple beneficiaries (e.g., 50% to spouse, 25% to each of two charities).
5. Notify the charity. The Land Conservancy and other Michigan organizations explicitly ask that you tell them -- otherwise they may never know your intent. Many will send you a simple "I have remembered you in my estate plan" acknowledgment form.

This is the fastest, cheapest, and most tax-efficient way to leave money to charity. It takes about 15 minutes.

Qualified Charitable Distributions (Age 70½+)

If you are at least 70½, you can give from your IRA during your lifetime through a Qualified Charitable Distribution (QCD). The benefits are unique:

• You can give up to $108,000 per year (2026 indexed amount) directly from your IRA to a qualified charity.
• The transfer is not counted as taxable income.
• It satisfies all or part of your Required Minimum Distribution (RMD) starting at age 73.
• You do not need to itemize on your taxes to benefit.
• Reducing your adjusted gross income may lower Medicare Part B premiums and reduce taxes on Social Security benefits.

To execute: contact your IRA custodian and request a check made payable directly to the charity (not to you). The check must clear by December 31 to count for the calendar year. If you have IRA check-writing privileges, write the check directly to the charity. Confirm the QCD with your tax preparer when you file -- it appears on the 1099-R as a normal distribution but you report it differently.

The QCD pairs beautifully with a charitable IRA beneficiary designation: you can give annually during your life AND leave the remainder to the same charity on your death. The University of Michigan, Michigan Humane, and most Michigan community foundations have planned-giving offices that handle this entire process at no cost.

Choosing the Right Charity

If you have a clear cause already in mind -- a church, college, or specific nonprofit -- skip this section. If you do not, a few practical Michigan-friendly options:

• Local community foundations. Almost every Michigan region has one (Community Foundation for Southeast Michigan, Grand Rapids Community Foundation, Michigan Gateway Community Foundation, etc.). They pool small bequests and distribute to local nonprofits. Lowest friction, highest local impact.
• Donor-advised funds. Schwab Charitable, Fidelity Charitable, and Vanguard Charitable let you set up a fund during life that becomes the beneficiary on death. Your family can recommend grants to specific charities over many years.
• Faith-based. Your church, synagogue, or mosque has a legal name and EIN. Get them from the office.
• Alumni associations. University of Michigan, Michigan State, Western, Northern, Wayne State -- all have planned-giving offices that will provide their legal name and EIN.
• Disease-specific national nonprofits. American Cancer Society, ALS Association, Alzheimer's Association -- if a specific disease affected your life, these are well-rated by Charity Navigator.

Before naming a charity, search them on the IRS Tax Exempt Organization Search (apps.irs.gov/app/eos) to confirm 501(c)(3) status and the correct legal name. Use the IRS-approved name -- not the brand name -- in your documents. Charity Navigator and GuideStar provide oversight ratings.

Mistakes That Sink Charitable Bequests

1. Using the brand name instead of the legal name. "American Red Cross" is not the legal name; "American National Red Cross" is. Mistakes in naming can delay or prevent payout. Use the IRS-confirmed name.
2. Naming a charity that has merged or dissolved. Include successor language so the gift redirects to a successor organization.
3. Restricting the gift too narrowly. A gift "to the East Detroit Cat Shelter's outdoor enclosure renovation project" may fail if the project does not exist when you die. Use "general charitable purposes" unless you have very strong feelings.
4. Forgetting the EIN. Some Michigan courts require it for probate distributions. Add it to the will to avoid confusion.
5. Leaving life insurance to charity but never updating the form. Like IRAs, life insurance is controlled by the beneficiary form, not your will.
6. Giving stock that has lost value. Stock with a loss should be sold during life (you get the tax loss); only donate stock that has appreciated.
7. Not telling the charity. Many will gratefully steward the relationship while you are alive -- and they may be able to honor specific naming preferences for buildings or programs only if they know in advance.

Your DIY Charitable Plan in 60 Minutes

1. Pick your charity (5 minutes). Confirm legal name and EIN via apps.irs.gov/app/eos.
2. Decide the amount and method (10 minutes). Specific dollar amount? Percentage of estate? IRA beneficiary? Multiple charities?
3. If giving from an IRA or life insurance (15 minutes): log into the custodian and update the beneficiary form. Done.
4. If giving from your will (15 minutes): use the CreateMIWill Will Kit charitable bequest clause. Copy the legal name, EIN, and address into the blank. Add successor language.
5. If giving from a brokerage account (10 minutes): request a TOD (Transfer on Death) form from your broker and name the charity. See our POD/TOD beneficiary guide.
6. Tell the charity (5 minutes). Send a one-paragraph email to their planned-giving office. Many will mail you a small acknowledgment letter for your records.

Frequently Asked Questions

Does Michigan have a state estate tax that affects charitable giving?

No. Michigan repealed its estate tax. Your charitable bequest does not generate Michigan estate-tax savings (there is no Michigan tax to save). It still saves federal income tax for your heirs if structured through an IRA designation.

How much do I need to give for a bequest to be worthwhile?

Any amount. Michigan probate courts honor a $500 bequest the same as a $500,000 bequest. Community foundations specifically welcome small bequests because they pool with thousands of others.

Can I change my mind after naming a charity in my will?

Yes -- as long as you have capacity. Sign a codicil or a new will revoking the old one. Beneficiary designations on IRAs and insurance can be changed online any time.

Will my family know I left money to charity?

Yes. The will is filed with the Michigan probate court and becomes a public record. Beneficiary designations on IRAs and insurance are private -- the family will only learn if they request account statements or the charity contacts them.

Can my church challenge my will if my kids contest it?

A named beneficiary -- including a charity -- has legal standing to defend the will against contests. Many churches and large charities will participate (or at least monitor) probate disputes when a meaningful bequest is at stake.

What if I want to give to a charity that does not exist yet?

Two options. Create a donor-advised fund now (Fidelity Charitable, etc.) and name it as your beneficiary -- your fund can later distribute to the future charity. Or use a Michigan community foundation as an intermediary; they can hold the funds and grant to new organizations as they qualify.

Is a charitable remainder trust right for me?

For most DIY Michigan donors, no. Charitable remainder trusts (CRTs) are powerful for estates over $500,000 with significant appreciated assets, but they are complex and require attorney drafting. For middle-class estates, a simple IRA beneficiary designation or will bequest accomplishes the same emotional goal at zero cost.

How do I leave my house to charity?

Three main options. (1) Will bequest -- charity inherits and sells. (2) Beneficiary deed (Michigan Lady Bird deed) -- charity becomes remainderman and you keep full control during life. (3) Retained life estate -- you transfer ownership but reserve the right to live there for life. See our Lady Bird deed guide.

Can I leave money to a foreign charity?

Yes, but the tax treatment is different. Foreign charities are generally not 501(c)(3) recognized in the US, so the bequest does not receive the same favorable treatment. Better path: give to a US-based 501(c)(3) that supports the foreign cause you care about.

What is the cheapest way to leave money to charity?

An IRA beneficiary form update. Free. Takes 15 minutes. Maximum tax efficiency. No probate involvement. The charity gets 100 cents on the dollar.

Build the Plan

You can leave a meaningful legacy without sacrificing your family. A single sentence in your will, a few minutes on an IRA beneficiary form, and a notification email to the charity -- that is the whole plan. The CreateMIWill Will Kit includes a Michigan-specific charitable bequest section pre-drafted to handle dollar amounts, percentages, residue, and successor charities. $89 for the entire estate plan, charitable provisions included.