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Planned Giving

Planned Giving

Planned giving is the process of arranging charitable gifts that fit well within your financial and tax goals. In many cases, choosing the best planned gift for your situation may enable you to achieve a significant estate or tax planning goal while also making a substantial contribution to your favorite causes.

There are many types of planned gifts, including:

Donor Advised Funds

A Donor Advised Fund is a family foundation alternative that provides a simple, flexible, efficient way to manage your charitable giving. You and your family can enjoy immediate and maximum tax advantages, make grants on a flexible time table, build your charitable legacy, and increase your philanthropic funds for future grant making.

Benefits of a Donor Advised Fund include:

  • Immediate and maximum tax benefits
  • Donate now, decide later
  • Tax free growth (which means more dollars for charitable purposes)
  • Privacy
  • Simple and effective Fund management
  • Reduced recordkeeping frustrations
  • Lasting legacy of giving
  • Flexible
  • No administrative responsibility



Bequests are the most common planned gift in America. It is simple and easy to arrange a charitable bequest in your will or living trust. When you leave a gift in your will or trust, you have full access to your money for as long as you are alive. Your gift goes to the designated charity only if you do not need it during your lifetime.

Types of Bequests

You can donate many types of assets with a specific bequest, including cash, bank accounts, real estate, stocks, bonds, mutual funds, and personal property. You may also leave a certain fixed percentage of your estate as a percentage bequest.
Another strategy is to use a residual bequest to make a gift of whatever is left after you have taken care of your relatives.

Arranging Your Bequest

You will need to visit a lawyer to have your bequest added to your will of living trust. The legal fee is usually very modest, and your lawyer will make sure you have all of the other documents you need, like a living will and a durable power of attorney.

If you have recently had your will or trust drafted, your lawyer can easily add an amendment, called a codicil, stating your bequest.


Beneficiary Designations

You can support the mission of your favorite charity by naming its foundation as a beneficiary on your:

  • Life insurance policy
  • Deferred annuity
  • IRA
  • Qualified retirement plan  (401(k) or 403 (b) plans)
  • Bank Account (called Payable on Death account)
  • Investment Account (called Transfer on Death account)

It is possible to designate any amount, from 1% to 100%. Gifts by beneficiary designation do not have to go through probate. Your gift will pass immediately to your designated foundation after your death, usually within a few weeks.


Gifts of Stocks, Bonds & Mutual Funds

One of the best ways to support your foundation of choice is with a gift of securities. You can donate shares of stock, bonds, and mutual funds directly to the foundation. For many people, this is an excellent way to make a charitable gift. If the securities you own have appreciated in value, you will have to pay capital gains tax when you sell them. However, if you donate them directly to the foundation, you completely avoid the capital gains tax, yet you can still claim a charitable deduction for the full market value.


Charitable Trusts

Charitable trusts are remarkably flexible planned giving arrangements that provide a wide variety of tax benefits to the donors. Because these trusts are fairly complicated, they should be drafted by an attorney. Due to the set-up costs, they are used mostly for gifts of $500,000 and up.

There are two basic types of charitable trusts: Charitable Remainder Trusts and Charitable Lead Trusts.

Charitable Remainder Trusts

You may fund a charitable remainder trust (CRT) with many different types of assets, including cash, stock, real estate and even a closely-held business interest. The CRT, which has been specifically approved by the United States Congress, is an irrevocable trust. Once you fund the trust, you will receive income payouts from the trust for life. At the end of your life, the assets in the trust will go the designated foundation.Since the trust is irrevocable, you receive an income tax deduction when you fund it, even though you enjoy the income for life. You can also defer capital gains tax and often reduce or eliminate estate tax.

Charitable Lead Trusts

A charitable lead trust (CLT) is usually used to reduce or eliminate estate taxes. After a donor transfers assets to a CLT, the trust will make annual payments to the designated foundation for a term of years, usually 15-25 years.

At the end of the term, the trust assets then pass back to family members, usually children or grandchildren. The annual payouts to the foundation provide an estate tax deduction and greatly reduce the estate tax that would otherwise be levied on the assets placed in the trust.


Life Insurance

You can make a charitable gift by donating an existing life insurance policy. You may have purchased life insurance many years ago for family protection that you no longer need. If this is the case, you can donate that life insurance policy as a charitable gift. When you donate a policy with cash value, you receive an income tax deduction. This is a great way to turn a old policy into a tax-wise gift that helps a foundation carry out its mission.

This information is not intended to be a substitute for specific individualized legal or tax advice. We suggest that you discuss your specific situation with a qualified legal and tax advisor.

All Financial Consultants at Pence Wealth Management are Registered Representatives with, and securities and Advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA & SIPC. Financial Planning offered through Pence Wealth Management, a Registered Investment Advisor and separate entity from LPL Financial. The LPL Financial representative associated with this website may only discuss and/or transact securities business with residents of the following states: Alaska (AK), Alabama (AL), Arkansas (AR), Arizona (AZ), California (CA), Colorado (CO), Connecticut (CT), Delaware (DE), Florida (FL), Georgia (GA), Hawaii (HI), Idaho (ID), Illinois (IL), Kansas (KS), Kentucky (KY), Louisiana (LA), Massachusetts (MA), Michigan (MI), Minnesota (MN), Mississippi (MS), Missouri (MO), Nebraska (NE), Nevada (NV),

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