As people face their own mortality, their legacy can become increasingly important to them, as their internal concept of self inevitably transitions to what others will say about them after they are gone. Charitable giving at the time of one's death can often be an intentional shaping of that story — a way for people to still tell their own narrative after they are gone and shape what is remembered by others as having been important to them.

A bequest is a gift that is made through a person's will or living trust that takes effect on that person's death. This is the most common way that people make a gift to charity at the time of their death and has been the traditional way of making a legacy gift for many years. If your grandparents or parents made a large legacy gift to charity, it was probably done through a bequest.

Bequests are an important part of nonprofit fundraising and can serve the legacy planning purposes of the donor very well. Legacy giving allows donors to pass on more than just stuff and money at their death. It allows a way for donors to communicate their ethics and values to their heirs, as well as leave them a community improved by philanthropy.

More from Fixed Income Strategies:
How to avoid the Social Security check blues
These Social Security myths can wipe you out
Few are prepared for this $280K retirement expense

Bequests are a great option and an important tool for many donors in planning their legacy. However, it is noteworthy that bequests, like many other traditional tools, are affected by tax laws that have changed substantially over the years.

As a result, bequests may not always be the best method for legacy-giving for many taxpayers any longer. Before settling on using a bequest, it is worth a thoughtful examination of all of your options to ensure what is best for your situation.

About 20 years ago the amount of money someone could transfer to friends and family without paying federal transfer tax was $625,000. Gifts to charity were exempt from this amount, so if someone died with $1 million and left $600,000 to family and $400,000 to charity, then they would not have to pay federal estate tax.

Today the amount of money you can transfer to your friends and family without paying federal transfer tax is $11.18 million. This means that if you have $11.18 million or less, you don't need a charitable estate-tax deduction to avoid federal estate tax. While very few people are subject to federal estate and gift tax due to this increased exemption amount, we all continue to be subject to income tax. As a result, many people who no longer benefit from a charitable estate-tax deduction would benefit from income-tax planning.

Two gifts that incorporate income-tax planning into making a legacy gift to a charity are an individual retirement account beneficiary designation and a charitable remainder trust.

As a general rule, withdrawals from a traditional IRA account are subject to ordinary income-tax rates. This rule applies to withdrawals made to heirs who own inherited IRAs, as well as for the original account owner. Since most other assets that would be transferred to your heirs through your will or trust at your death are not subject to income tax at ordinary income rates and, in fact, will receive a stepped-up basis at your death, there is often a substantial tax benefit to leaving a gift to charity out of your IRA in place of a bequest.