Much of the incentive stems from a desire to direct their money to a charity instead of having it fall into the federal government's black hole. The Shepherd College Foundation provides donors who include the organization in their estate plans with an added incentive by awarding membership in the Foundation's Joseph McMurran Society. The unified credit can be used during life to shelter gift amounts that exceed these limits. Transfers to charity are free of gift tax. Capital assets receive a step-up in basis when transferred at death.
Heirs inherit the donor's basis if the transfer takes place during life.
An unlimited amount may pass to a surviving spouse as long as the spouse is a U.S. citizen. Beneficiary forms should be used to designate retirement plan assets. Wording in a will may be inadequate, thus leading to adverse tax consequences. If a normal life expectancy is anticipated, it is often to the donor's advantage to make transfers during life and benefit from an income tax deduction, as well as experience the joy of giving. Income, capital gains, and estate taxes dominate tax planning for the majority of donors.