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Featured 08.25.2017

"Statistically, women live longer than men and as such, we are often the ones who manage the financial gifts that are passed on from one generation to the next."

Creating a Legacy: Charitable Giving

We often talk about the importance of making charitable giving an active element of your financial strategy. While charitable giving is tax deductible for the donor, it can be about so much more than just reducing one’s tax liability. For many, it’s about sharing a passion, a personal value, or a making a statement about what you loved during your lifetime.

Statistically, women live longer than men and as such, we are often the ones who manage the financial gifts that are passed on from one generation to the next. And so, it’s important that you understand the ins and outs of legacy giving – and how to set up a gifting strategy that will responsibly support you and your family while also fulfilling your philanthropic vision.

Here is an introduction to the basics of legacy giving.

  • 1


    A bequest is an endowment of a specific dollar amount, a particular asset, or a fixed percentage of your estate to the organization of your choice. To set up a bequest, you will need to work with your Financial Planner and Estate Lawyer first to define the size and scope of your gift that will make sense in tandem with your other goals, and then your lawyer can write the bequest up in your Will and Trust.

  • 2

    Contingency Bequest

    There is also an option of planning a contingency bequest. That means that you will name a charity that will receive your bequest ONLY IF a particular descendant does not survive you. (i.e. if my son John passes before I do, the bulk of my estate is to be donated my beloved charity, instead.) This is a great way to ensure that you are providing for your family first, but in the event that your family members do not need your financial support, your money will go exactly where you want it to do.

  • 3

    Planned Giving

    Charitable giving while you’re alive can be both personally fulfilling and financially savvy in limiting your tax liability. However, it is often important to save the major gift giving for after your death. This way, you can ensure that you and your family have everything that you need while you’re living, and that the assets that remain after your passing can be given to your favorite charity.

  • 4

    In-Kind Gifts

    In-kind gifts can be the gift of goods or services, but they can also be the transfer or assets – either financial or property – to the charity of your choice. These can be especially savvy because they make the most of the value of the donation because Capital Gains Tax isn’t an issue. Let me explain:


    Lets say that you bought some stock for $1,000 and it is now worth $10,000. If you sold the stock to donate the proceeds to charity, the IRS would want to tax you on the $9,000 gain that is your profit. BUT, if you transfer ownership of the stock to your favorite charity, you will not pay capital gains tax, but instead will simply take a $10,000 deduction off your taxes. Then, the receiving charity can sell the stock, tax free, and keep the whole $10,000 for to advance its vision.

  • 5

    Split Interests Trusts

    Split Interest Trusts are the have your cake and eat it too, of charitable giving. In these cases, the transferred property is given to another individual for a period of time. Once that period of time has passed, the trust is passed on to the charity. This is an approach for those who want to provide benefit to a charity following their passing, but feel bound to benefit a loved one for a period before passing assets along to a charity.

  • 6

    Donor Advised Funds

    These are funds that are maintained by the 501c(3) of your choice. Once a donor gives to the fund itself, the organization maintains the funds and possesses legal control over the fund. However, the donor’s representative retains advisory privileges in terms of how the funds are distributed throughout the organization. In many cases, the next generations of children and grandchildren can also act as advisors, so that the intention of the donation can be monitored and maintained for the span of its influence.

  • 7

    Next Steps

    So, now that you have some of the key language at your fingertips, let me suggest your next steps.


    As with any donation, it will behoove you to do your research and ensure that the charity of your choice will be using your gift in a manner that will make you proud. And, while you can work closely with your Financial Planner and your Estate Lawyer to ensure that your money is spent with prudence, I also recommend that you work with the Charity’s fundraisers directly to plan your gift well in advance. They are the professionals that they will be able to work with you to shape a strategy that is unique to you and serve your interests in your absence.


    LPL Financial does not provide tax or legal advice. Clients should consult with their personal tax or legal advisors regarding their personal circumstances.LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.
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