Trends in Testamentary Giving in the U.S.

Testamentary giving in the United States is undergoing a structural shift driven by demographic change, the rise of retirement‑based philanthropy, and the growing ease of making non‑probate gifts through beneficiary designations. The result is a landscape where charitable bequests remain a major philanthropic channel, but the form of those gifts is changing—moving steadily from traditional will bequests toward streamlined transfers of retirement assets, life insurance, and financial accounts. Let’s examine those trends, the expanding role of qualified charitable distributions (QCDs), and how lifetime charitable behavior increasingly predicts testamentary designations.

Demographic and Structural Drivers of Testamentary Giving

Aging population and wealth concentration

The Baby Boomer generation continues to drive the largest intergenerational wealth transfer in U.S. history. Their assets are disproportionately held in retirement accounts—IRAs, 401(k)s, and similar plans—rather than in taxable estates or probate‑controlled property. This shift alone has elevated the importance of beneficiary designations as a charitable planning tool.

Decline of taxable estates

Federal estate tax thresholds remain historically high, and in 2026 the exemption is scheduled to adjust under existing law. As a result, only a small fraction of estates owe federal estate tax. This means most charitable bequests are made for personal, mission‑driven reasons rather than tax avoidance. It also means that donors increasingly look for simple, low‑cost, and administratively easy ways to leave charitable gifts—conditions that often favor beneficiary designations over relatively complex trust structures.

Rise of non‑probate transfers

Financial institutions have made beneficiary designations easier than ever. Online portals, simplified forms, and the ability to designate multiple beneficiaries with percentage allocations have normalized this method of giving. For many donors, updating a beneficiary form is far easier than revising a will.

Growth of Beneficiary Designations as a Testamentary Gift Vehicle: Why beneficiary designations are surging:

Several factors explain the rapid growth of beneficiary designations for charitable gifts:

• Retirement accounts are often a donor’s largest asset. IRAs and 401(k)s can represent the majority of household wealth for middle‑ and upper‑middle‑income donors.
• Charities receive retirement assets tax‑free, while non-charitable heirs pay income tax on inherited retirement assets. This makes retirement accounts the most tax‑efficient asset to leave to charity.
• ​Ease of execution. Donors can complete or update a beneficiary designation in minutes, without legal fees.
• Alignment with lifetime giving behavior. Donors who make QCDs during life often develop a habit of using their IRA as a charitable tool, making it natural to extend that habit to testamentary gifts.

Beneficiary designations vs. will bequests

Traditional bequests by will remain important, but beneficiary designations now account for a growing share of charitable estate gifts. Donors appreciate that:

• The assets pass outside probate
• The process is private
• The designation can be changed without revising estate documents
• The gift is simple for the executor and heirs to administer

This trend is especially strong among donors with modest estates who want to leave a meaningful gift without engaging attorneys or creating complex trusts.

Qualified Charitable Distributions as a Pipeline to Testamentary Gifts

QCDs as a behavioral gateway

QCDs allow IRA owners aged 70½ or older to make direct transfers from their IRA to charity without including the distribution in taxable income. These gifts often satisfy part or all of the donor’s required minimum distribution (RMD). Donors who use QCDs tend to:

• View their IRA as a philanthropic asset
• Become comfortable directing retirement funds to charity
• Develop a habit of annual giving from the IRA
• ​Recognize the tax efficiency of using retirement assets for charitable purposes

This behavioral pattern makes QCD donors exceptionally strong prospects for naming charities as beneficiaries of their retirement accounts at death.

Annual QCD limits for outright gifts

The maximum allowable QCD amount is indexed for inflation. The limit is $111,000 for 2026 .This limit applies to outright QCD gifts made directly to qualified public charities.

QCDs for charitable gift annuities and charitable remainder trusts

The Consolidated Appropriations Act of 2023 expanded QCD rules to allow a one‑time transfer to fund a charitable gift annuity (CGA) or charitable remainder trust (CRT). The maximum allowable transfer for this purpose is $55,000 for 2026.

This one‑time QCD for life‑income gifts is separate from the annual QCD limit for outright gifts.

Why QCD donors are prime candidates for beneficiary designations

Donors who use QCDs during life already understand:

• The tax efficiency of giving retirement assets
• The simplicity of directing IRA funds to charity
• The satisfaction of using their IRA to support causes they care about

These donors often have fewer psychological barriers to naming a charity as a beneficiary of their IRA. They have already “tested” the idea through lifetime giving.

Charitable Gift Annuities and Charitable Remainder Trusts Funded by QCDs

Charitable gift annuities (CGAs)

CGA funding through a QCD offers donors:

• A guaranteed lifetime income stream
• A simple contract structure
• No need for a separate trust document
• A one‑time opportunity to use up to $55,000 (2026) of QCD funds for this purpose

Because CGAs are simple and inexpensive for charities to administer, they are an attractive option for donors who want both income and charitable impact.

Charitable remainder trusts (CRTs)

CRTs funded by QCDs are legally permissible under the expanded rules, but they are significantly less attractive for most donors because:

• CRTs require a custom trust document
• ​Legal fees can be substantial
• Administration is more complex
• The one‑time QCD limit of $55,000 (2026) is often too small to justify the cost
• Many donors prefer the simplicity of a CGA

The legal and administrative costs associated with CRTs make them a poor fit for QCD funding unless the donor has other assets to contribute or a strong preference for the CRT structure.

Testamentary Giving Trends in Detail

Shift from probate‑based giving to account‑based giving

As more wealth is held in retirement accounts, donor‑advised funds, and investment accounts with transfer‑on‑death (TOD) designations, charitable estate gifts increasingly bypass wills. This shift has several implications:

• Charities must educate donors about beneficiary designations
• Estate planners must integrate charitable intent into non‑probate assets
• Donors must coordinate designations with their overall estate plan to avoid unintended outcomes
• Increased use of retirement assets for charitable bequests

Retirement assets are often the best assets to leave to charity because:

• Charities receive them tax‑free
• Heirs would otherwise pay income tax
• The designation process is simple
• Donors already use retirement assets for QCDs during life

This tax efficiency is a major driver of the trend.

Donor‑advised funds as a testamentary tool

Many donors with DAFs name charities as successor beneficiaries. While this paper focuses on testamentary giving more broadly, DAFs play a growing role in estate planning because they:

• ​Allow donors to involve family members
• Provide flexibility in selecting final charitable recipients
• Offer a simple mechanism for continuing philanthropic values

Simplicity as a dominant preference

Across all giving vehicles, donors increasingly prefer:

• Low‑cost options
• Minimal legal complexity
• Easy updates
• Clear, predictable outcomes

Beneficiary designations and QCDs align perfectly with these preferences.

The Role of Advisors and Nonprofits in Supporting These Trends

Advisors

Financial advisors, estate planners, and CPAs play a crucial role in:

• ​Identifying QCD‑eligible clients
• Encouraging tax‑efficient giving strategies
• Ensuring beneficiary designations align with estate plans
• Helping donors understand the advantages of leaving retirement assets to charity

Nonprofits

Charities can support these trends by:

• Educating donors about beneficiary designations
• ​Including retirement‑asset language in planned giving materials
• Encouraging QCDs as a way to deepen donor engagement
• Providing clear instructions for naming the organization as a beneficiary
• Training staff to recognize QCD donors as strong estate‑gift prospects

Why Testamentary Giving Is Increasingly Integrated with Lifetime Giving

Behavioral continuity

Donors who give consistently during life—especially through QCDs—are far more likely to include charities in their estate plans. Lifetime giving establishes:

• Emotional connection
• Habit formation
• Identity alignment (“I am the kind of person who supports this cause”)
• Trust in the organization’s stewardship

Predictive indicators

The strongest predictors of testamentary gifts include:

• ​Long‑term giving history
• Use of QCDs
• High engagement with the organization
• Ownership of retirement assets
• Desire for simplicity in estate planning

These indicators align closely with the trends described above.

Implications for the Future of Testamentary Giving

Continued growth of beneficiary designations

Given demographic patterns and the structure of household wealth, beneficiary designations will likely become the dominant form of charitable estate gift over the next decade.

Expansion of QCD‑based philanthropy

As QCD limits rise with inflation and more donors reach age 70½, QCDs will continue to grow as a philanthropic tool. Their role as a pipeline to testamentary gifts will strengthen.

Limited use of CRTs funded by QCDs

While legally permissible, CRTs funded by QCDs will remain rare due to legal costs and administrative complexity. CGAs will be the preferred life‑income option for QCD donors.

Greater integration of financial planning and philanthropy

Advisors will increasingly incorporate charitable planning into retirement and estate strategies, especially for clients with significant IRA balances.

Conclusion

Testamentary giving in the United States is evolving toward simplicity, tax efficiency, and alignment with lifetime giving behavior. Beneficiary designations—especially of retirement assets—are becoming a central tool for charitable bequests. Qualified charitable distributions reinforce this trend by helping donors view their IRAs as philanthropic assets during life, which naturally leads to naming charities as beneficiaries at death.

The maximum allowable QCD amounts ($111,000 in 2026 for outright gifts and a one‑time $55,000 transfer for CGAs or CRTs) provide donors with flexible options for integrating philanthropy into their retirement planning. However, the legal costs associated with charitable remainder trusts make them far less attractive than charitable gift annuities for QCD funding.

As wealth continues to shift into retirement accounts and as donors seek low‑friction ways to express their values, beneficiary designations and QCDs will play an increasingly central role in shaping the future of charitable estate giving.