Legacy Giving: Giving Through a Will, Trust or Beneficiary Designation

Legacy giving, sometimes called planned giving, means arranging in advance for a gift to a charity that takes effect later, usually at death. Instead of writing a check today, you set up a document or account instruction that directs part of what you leave behind to a cause.

The most familiar tools are a charitable bequest in a will, a gift through a revocable or irrevocable trust, and a beneficiary designation that names a charity on a retirement account, life insurance policy or similar account. Each works a little differently and sits in a different document.

Charitable giving in estate planning can be large or modest. Some people name a charity for a specific item or amount, some for a share of the estate, and some for what remains after family members are provided for. Which approach fits depends on your family, your assets and your goals.

Traditionally, many people have started with a will. A bequest in a will is a written instruction that a certain asset, amount or percentage goes to a named charity. Wills are commonly reviewed by an estate planning attorney and may pass through probate.

Beneficiary designations have long been used for assets that pass by contract rather than by will. Retirement accounts, annuities and life insurance often allow you to name a charity directly, and that instruction generally controls regardless of what the will says. Leaving an IRA to charity is a frequently discussed example, in part because of how different heirs and charities are taxed on those assets.

Trusts have traditionally been used when people want more structure, such as providing for loved ones first and a charity afterward, or giving over a set period of time. Tax rules for all of these methods change by year and by situation, so people typically confirm current details with a CPA or attorney.

The right planner may help you sort out what you want to accomplish before choosing a tool. That can include looking at which assets you own, how each one passes to others, and whether your existing documents and account designations say what you intend.

A first visit is usually a conversation. Expect questions about your family, your assets, your charitable interests and how comfortable you are with flexibility versus permanence. You may be asked to bring a will, trust documents and recent account statements. A planner may coordinate with your CPA and estate planning attorney.

Questions you might ask include: How do these gift types differ for the assets I own? How would a gift affect my heirs? Can I change my mind later? How do I confirm the charity can accept the gift as written? What are your credentials, and how are you paid? Always confirm current figures and suitability with your own CPA or estate planning attorney before acting.