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The complete guide to planned giving

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Did you know that you can contribute to the causes you care about while making your end-of-life arrangements?

A big part of end-of-life planning involves assessing your assets and determining how you’d like them divided up after you pass. Of course, you can always bestow them on your friends and family, but you can also contribute to charitable organizations through what’s known as planned giving. This form of donating allows you to continue supporting your favorite causes even after you’ve passed away. 

In our guide below, we’ve provided an in-depth look at planned giving and how it relates to Giving Tuesday. 

What is planned giving? 

Planned giving, also known as legacy giving, refers to a charitable donation that you can make now and allocate later. Unlike an ordinary charitable gift that’s for immediate use, this gift is meant for the future, typically after you pass away. 

The donation is often doled out after death because the funds are usually pulled from life insurance, equity, and other assets — not your main bank account or regular earnings. 

With that said, you don’t have to wait until you’ve passed to donate. There are other types of planned giving that let you arrange distributions while you’re still living. 

What are the different types of planned giving?

There are many different ways to make a planned gift, and the donation doesn’t always have to be cash. Three main types of planned giving include bequests, charitable gift annuities, and trusts. 

A bequest is the easiest and most common planned gift you can make. You can include a bequest in your will or living trust. Generally, there are four ways you can do this:

  • A demonstrative bequest usually refers to money from a bank account or other specific source or fund.
  • A specific bequest is a donation typically involving a specific item of personal property like a piece of jewelry or vehicle. 
  • A general bequest includes property or the value of the property taken from the estate rather than a specific account or fund.
  • A residuary gift covers the leftover money after all other estate expenses, including debts and loans, have been paid.

A charitable gift annuity is another avenue you can take. In this case, you sign a contract with an organization, making a sizable donation in the form of cash, assets, or securities, which the organization then invests. In return, you receive partial tax deductions and monthly or quarterly payouts (stream income) from the investment’s earnings. Upon your death, the organization will receive the remaining balance of the invested funds. 

You can also donate through a trust. Like with charitable gift annuities, you can receive partial tax deductions and income streams when gifting this way. With a charitable lead trust, you donate to an organization for a set term. After that term expires, the remainder of the assets go to you or designated family members or beneficiaries. There’s also a charitable remainder trust. This irrevocable trust is similar to a lead trust, except after the term expires, the remainder of the donation goes to the organization instead of you or a beneficiary. 

Why consider planned giving? 

First and foremost, planned giving provides you with a way to preserve your legacy. It’s an opportunity for you to contribute to a charitable organization that’s meaningful to you or aligns with your ideals. With a planned gift, there’s comfort knowing that your donation is helping the future of the organization even after you’re no longer here. 

Another reason you might consider arranging a planned gift is that you can receive tax and financial incentives, too. For example, both charitable gift annuities and trusts allow you to benefit from the income the donation generates through investments. 

When do you arrange planned giving? 

It’s never too early to start discussing end-of-life plans with your attorney or financial advisor, and arranging a planned gift can be a part of that discussion. Because there are financial perks associated with certain types of donations, planned giving can also be a part of your current financial strategy. 

Taking all this into consideration, you can donate a planned gift at any time, but you may be especially inspired to do so on Giving Tuesday. 

What is Giving Tuesday?

Giving Tuesday is a global generosity movement started in 2012 that takes place on the Tuesday after Thanksgiving. 

On this day, you’re encouraged to engage in acts of kindness, no matter how big or small. It could mean showing up for someone in need, joining a volunteer effort, supporting a local business, donating your time or money to an organization, or even simply making someone smile. 

This day reminds us of the importance of giving back to our community. If you’re interested in supporting a special cause, a planned gift is one of the many ways you can make a lasting impact. 

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