Updated: May 1, 2023

Have you ever considered opening a legacy fund?

Planned gifts allow you to communicate how you would like an estate gift tax to be administered. They have no assets in them until a gift is received from an estate.

Fiscal responsibility and transparency are crucial considerations when deciding to establish a fund. And the kind of assurance you desire is possible if you work with a sustainable organization.

9 Types of Legacy Funds

There are six different ways you can give a gift in the form of a legacy fund:

  1.  Bequest by Will or Living Trust
    A charitable bequest can be made in your will or living trust. You identify an organization as the beneficiary of a given amount, a percentage, or the residue of your estate. That organization works with you to ensure your wishes are honored.
  2. IRA, 401(k) or Other Qualified Retirement Plan
    Many people have assets in a qualified retirement plan to provide financial security during retirement. A portion of these assets will often remain after passing. If you plan to pass those assets on to anyone but your spouse, they will be subject to taxation equaling as much as 80 cents or more on the dollar! Making a trusted organization the successor beneficiary to your spouse for those remaining assets gives the full dollar value to support your charitable goals, while removing the assets from your estate for tax purposes.
  3. Charitable Remainder Trust
    A charitable remainder trust (CRT) permits you to make a gift and receive income in return. You can establish a fund with trust assets to support essential charities using a charity. The charity receives the assets at the end of the trust’s term and provides ongoing stewardship of your charitable wishes. This option has additional benefits if you use appreciated assets to fund the trust, as you will not be subject to capital gains taxation. You will also be entitled to an income tax charitable deduction.
  4. Charitable Lead Trust
    The charitable lead trust (CLT) is the reverse of the CRT. The trust distributes income to the charity for years or throughout your lifetime, with the assets returning to you or, more typically, to family members. The CLT allows you to make a significant gift to a charity and transfer assets to family members with reduced or no gift and estate taxes.
  5. Charitable Gift Annuity
    A charitable gift annuity is similar to a CRT, providing a guaranteed income stream to you and your spouse or someone else for the rest of your lives. You transfer the property to a charitable organization and receive a charitable tax deduction for a portion of the transfer. You also avoid capital gains tax and future estate taxes on appreciated gifted property.
  6. Life Insurance
    Many individuals have a paid-up life insurance policy that has been filed away, perhaps initially intended for children who are now grown or have sufficient assets. Making an organization the owner and beneficiary of such a policy provides an income tax deduction and is a beautiful gift to support essential charities.
  7. Donor-Advised Fund
    A donor-advised fund (DAF) can be used to give now, give later or both. A DAF succession plan engages family members within the philanthropic goals set by the donor. You can create your DAF during your lifetime or from your estate later. DAFs are the most popular philanthropic option at San Diego Foundation.
  8. Charitable Endowment
    Leave property or money in an endowment so the charity does not spend the principal. Instead, the nonprofit, often a community foundation like San Diego Foundation, grants the endowment income (as the donors usually have done throughout their lives) per your instructions. It is helpful to suggest a general purpose for the endowment fund because it will last perpetually, and the original purpose for the gift may not exist in the future.
  9. Custom Estate Plan for Business, Investments or Child with Special Needs
    If you own a family business, substantial real estate holdings or a large estate, a custom plan that considers your special property goals and requirements can be created. A custom plan option is also helpful if you have a child with special needs. A child with special needs may be provided for through a “special needs trust,” which gives you peace of mind and facilitates the care of the child by providing resources and directions.

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We honor the philanthropic legacy of our donors. As you think about the long-term change you will make in the causes you care about most, we hope you will consider The Foundation as the vehicle to make it happen. Click the button below to learn more.

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