Leave your Legacy through Planned Giving

Charles Helme |

There comes a point in life where you want to begin sharing or gifting all the things you’ve collected over the years—stories, wisdom, financial wealth. And unlike the Ancient Egyptians believed, you cannot take your worldly goods with you when your light goes out. You can share your stories wisdom in a manifesto or through funny tales to your family, but what about the money? Like most, you have (or should have) a will and most of your assets are likely going to friends and family. But, what about the causes and organizations you care about the 501(c)(3)s that depend on kind donations to continue doing the greatest good than you could do as an individual? Who is going to make your annual donation when you’re gone?

Planned giving is the answer. Just like it sounds, planned giving is the act of creating a contribution of non-probate transfer vehicles (such as savings and checking accounts, investment funds, real estate), real property, or non-cash assets (like securities or retirement accounts), that is usually dispersed after an individual’s passing. However, there are plenty of people who utilize planned giving options of a “retained life estate” or a “charitable remainder trust” during their lifetimes.

Critical Control

Giving to the annual campaign is great and attending the big events is important, but there’s always this sense that your money isn’t going exactly where you would choose it to go. For example, you may be fully vested in one specific youth program at the local YMCA, but when you support the YMCA generally, your money is also going to other operations. With a planned gift you can specify in precise detail where every last penny is to be spend.

A Taxable Difference

Planned giving should feel good knowing you’ll be a philanthropic force of support and aid to the people and causes you care about even after you’re gone. And, the advantageous tax breaks are the cherry on top. Tax benefits are governed by state and federal laws that define what and when charitable donations make for deductions (income/estate/etc.). To be sure your gift is irrevocable (a contracting term that is usually required for tax benefits), and that you’re doing right by your finances, it’s wise to talk to your trusted financial advisor and lawyer. Some charities will retain a professional consultant available to help as well.


Many donors of planned gifts make them a surprise. You don’t have to tell an organization you’re planning on giving them a major donation, but it could help them plan out their budget. Notice of a planned gift is called the bequest intention and isn’t legally binding...but it may be of benefit to the receiving organization. Planned giving represents, often, a huge piece of donor gift pie.

Types of Gifts

Not all planned gifts are allocated the same and it’s important to know what time of donation you want to give.

  • Charitable bequest: An official statement in a legal document (such as an estate plan or will) that designates either a specific amount, percentage amount (such as a percentage of total assets), or a remainder amount (what’s left over after everything else in the will or plan has been paid out).
  • Charitable gift annuity: An agreement between the donor (while alive) and the organization where the donor gifts a large sum to the nonprofit. The nonprofit then pays the donor a set portion of that sum for the remainder of the donor’s lifetime, where payments usually end with the donor’s death and the organization than keeps the remainder of the gift. While this sounds a little funky at first it can have major tax benefits! But, laws on charitable gift annuities range from state to state, so it’s wise to check your jurisdiction.
  • Charitable remainder trust: A trust fund is created and gifted to an organization that then pays trustees an annual amount. When it’s all send and done the charity then receives the remaining funds after the trust term is complete. (A charitable remainder unitrust pays a percentage of the leftover trust fund once the term is closed.)

No matter what you want to leave your mark on, be sure to have a plan that sets both you and your intended beneficiaries up for success and to reap the benefits.

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2024 Advisor Websites.