Legacy giving, often referred to as planned giving, is a powerful way to make a charitable contribution as part of your broader financial and estate planning. It allows you to support the causes you deeply care about, ensuring your values live on and continue to make a difference long into the future. For many non-profit organizations, legacy gifts are vital for their long-term sustainability, providing crucial resources to continue their important work.
Essentially, legacy giving involves thoughtfully deciding how you want to allocate a portion of your assets or estate to charitable organizations, either during your lifetime or after you pass away. This significant decision allows you to create a lasting legacy, supporting the missions closest to your heart for years to come.
It’s important to understand that legacy giving can take many different forms. To ensure you choose the option that best aligns with your financial situation and charitable goals, consulting with an experienced attorney or financial advisor is highly recommended. They can provide personalized guidance and ensure your legacy giving plan is legally sound and effectively executed.
Here are some common methods of legacy giving:
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Bequests: Perhaps the most straightforward form of legacy giving, bequests involve designating a specific amount of money, a percentage of your estate, or particular assets in your Will to a charitable organization. You can also name a charity as the beneficiary of a life insurance policy, a retirement account such as a 401(k), 403(b), or IRA, or other retirement plans. This is a simple yet impactful way to include charitable giving in your estate plan.
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Securities Giving: Donating appreciated securities like stocks, mutual funds, or bonds can be a tax-efficient way to give. By donating these assets directly to a charity, you may avoid capital gains taxes while still receiving a charitable deduction for the fair market value of the securities.
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Charitable Gift Annuities: This option allows you to donate assets to a charitable organization during your lifetime in exchange for fixed payments for life. A portion of these payments may be tax-free, and you’ll also receive a charitable deduction for the gift portion of the annuity.
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Charitable Remainder Trusts: These trusts involve transferring assets into a trust that pays an income stream to you or your chosen beneficiaries for a specific period or for life. After this period, the remaining assets in the trust go to the designated charitable organization. This can provide both income and a future charitable gift.
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Endowment Funds: If you wish to provide long-term, ongoing support to a cause, you can establish an endowment fund. The principal of the fund is typically invested, and a portion of the interest or investment returns is used to support the charitable organization’s activities, ensuring a perpetual stream of funding.
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Qualified Charitable Distributions (QCDs): For individuals age 70½ and older, a Qualified Charitable Distribution (QCD) offers a tax-smart way to donate from an IRA. A QCD involves directly transferring funds from your IRA to a qualified charity. Because the distribution goes directly to charity, it isn’t included in your taxable income, which can be particularly beneficial for those who don’t itemize deductions or want to lower their taxable income in retirement. QCDs can also satisfy your Required Minimum Distribution (RMD) if you are over age 73 (or 72 depending on your birthdate), further enhancing their tax efficiency.
Important Note Regarding Gift Acceptance: It is crucial to be aware that many charitable organizations have gift acceptance policies. For instance, as noted in the Dorcas Gift Acceptance Policy, certain types of legacy gifts, particularly real property, personal property, and some securities, may require review and approval by their Board of Directors before acceptance. This is due to the potential liabilities or complexities associated with managing these types of assets. If you are considering donating such assets as part of your legacy giving, it’s always best to discuss it with the charity beforehand to ensure a smooth and mutually beneficial process.
By considering legacy giving, you can create a meaningful and lasting impact, supporting the organizations and causes that are important to you and contributing to the well-being of your community and beyond, perhaps even supporting local initiatives like Thrift To Gift Cary Nc in your own neighborhood.
