Many people want to support their favorite charities but feel they don’t have the financial flexibility to give right now. Fortunately, planned giving allows you to leave a legacy without impacting your current budget. These gifts cost you nothing today but can make a significant difference in the future.

1. What Is Planned Giving?

Planned giving refers to charitable donations arranged in advance, often as part of an estate plan. These gifts typically take effect after the donor’s lifetime, ensuring long-term support for the causes they care about.

Benefits of Planned Giving:

• No immediate impact on your finances.
• Potential tax advantages for you and your heirs.
• Creates a lasting legacy aligned with your values.

2. Types of Gifts That Cost You Nothing Now

1. Bequests in a Will or Trust

A bequest is one of the simplest ways to support a charity. You can designate a specific dollar amount, a percentage of your estate, or a residual amount after other bequests are fulfilled.

How to Set It Up:

• Work with an attorney to include a charitable bequest in your will or trust.
• Specify the nonprofit’s legal name and tax ID to ensure clarity.

2. Beneficiary Designations

You can name a charity as a beneficiary of financial assets, such as:

• Life insurance policies
• Retirement accounts (IRA, 401(k), 403(b))
• Bank and brokerage accounts (via a Payable on Death (POD) or Transfer on Death (TOD) designation)

How to Set It Up:

• Contact your financial institution or HR department.
• Update your beneficiary forms to include your chosen charity.

3. Donor-Advised Funds (DAFs)

A Donor-Advised Fund allows you to recommend charitable grants over time. Upon your passing, remaining funds in the DAF can be directed to nonprofit organizations of your choice.

How to Set It Up:

• Open a DAF through a financial institution or community foundation.
• Name a charity as the remainder beneficiary.

4. Charitable Remainder Trusts (CRTs) and Charitable Lead Trusts (CLTs)

These trusts allow you to provide income to heirs or yourself while benefiting a charity in the long run.

• CRTs: Provide income to beneficiaries for life or a term of years, with the remainder going to charity.
• CLTs: Provide income to charity for a set time, then pass assets to heirs.

How to Set It Up:

• Consult an estate planning attorney or financial advisor.

5. Real Estate and Personal Property

You can leave your home, land, or valuable personal assets to a charity through a retained life estate or outright bequest.

How to Set It Up:

• Discuss options with an attorney.
• Ensure property transfers align with estate goals.

3. Tax Advantages of Planned Giving

Some planned gifts offer tax benefits that can reduce estate taxes and provide other advantages:

• Bequests: Reduce taxable estate value.
• IRA Charitable Rollover: If over 70½, you can make direct gifts from an IRA to avoid income tax on required minimum distributions.
• Trusts: Provide income tax or estate tax deductions.

4. How to Get Started

1. Identify the causes that matter most to you.
2. Talk to a financial advisor or estate attorney.
3. Contact your chosen nonprofit to discuss options and ensure alignment with their giving policies.
4. Update your legal documents and beneficiary forms accordingly.
5. Notify the nonprofit of your planned gift so they can recognize your generosity.

5. The Bottom Line

Planned giving allows you to make a lasting impact without affecting your financial security today. By including charitable bequests, beneficiary designations, or other deferred gifts in your estate plan, you can ensure that your values continue to support meaningful causes for generations to come.

Final Thought:

You don’t have to be wealthy to leave a meaningful legacy. A gift that costs you nothing now can create a brighter future for the charities and communities you care about most.