Guide to Leaving a Legacy

Jun 24, 2021

Guide to Leaving a Legacy

American philosopher William James once said, “The great use of life is to spend it for something that will outlast it.”

Have you ever stopped to think about the impact you want to have on the world? Each day—and every dollar—is an opportunity to make a difference. Not sure where to start? Here are several ideas to get you on your way!

Your Presence Is a Present

Not every charitable-minded person is financially positioned to give money to favorite charities or causes. What we sometimes fail to realize is that, money aside, every one of us is a valuable asset! Charities could not exist without volunteers. Find an organization whose mission resonates with your values and ask what you can do to help.

Are you good at working on teams? Serving on a non-profit’s Board of Directors (BOD) may be an excellent way to use your skills. The board is the governing body that oversees the organization’s activities. If you serve on a board, ask about liability insurance to protect board members if the BOD is sued. Another thing to note: By serving on a board, you may be agreeing to both time and financial commitments. Be sure you understand the expectations and requirements before signing on.

Using Your Portfolio to Fulfill Your Gifting

Investments are great tools for bringing your charitable wishes to life.

When you donate to a registered 501(c)3 organization, your investment asset can be sold for cash by the charity tax-free. Below are several options available for donating investments.

  • Stocks. Gifting shares of stock directly to an organization is an easy way to remove highly appreciated assets from your portfolio tax-free. Plus, you’ll receive a charitable deduction (in the year of the gift) for the value of the shares you donate.

  • Donor Advised Funds (DAFs). DAFs are advantageous due to their flexible gifting timeline. Donations to a DAF are irrevocable, which results in an immediate deduction. However, you can release the funds to charities over time. Fund owners have the option to hold cash or invest the money in their DAF, maximizing the impact.

  • Qualified Charitable Distributions. Distributions from IRAs are taxed as ordinary income. However, once you reach age 70 1/2, the tax code allows you to donate all, or a portion, of your distribution (up to $100,000 per year), directly to a charity. This is known as a Qualified Charitable Distribution. Since you pay no income tax on the would-be income, you don’t need to itemize the donation on Schedule A.

  • Charitable Trusts. These irrevocable trusts provide great benefits to all parties involved. A Charitable Remainder Trust provides income to a named beneficiary for a specified period of time. Once that time period ends, the trust assets pass to charity. On the flip side, a Charitable Lead Trust provides a charity with an income stream for a specified amount of time. When that time period ends the trust passes to the beneficiary. In both scenarios, the donor receives a partial charitable deduction in the year of the donation.

Thinking Outside the Box

Donating investments to charity isn’t your only option. Here are other ways you can leave a legacy.

  • Your Estate. You have the ability to leave a bequest to charity(ies) through your Last Will & Testament or Revocable Trust. The amount of your gift (percentage or dollar amount) and names of charities would need to be included in the provisions of the document.

  • Beneficiary Designations. At your death, your retirement accounts and life insurance policies pass to the named beneficiary. You can get creative with your designations by leaving a percentage or dollar amount to charitable organizations in combination with individuals. If you intend for individuals to receive part of your estate, then avoid naming a charity as the beneficiary of your Roth IRA. Roth IRAs pass to individuals as beneficiaries tax-free.

  • Real Estate and Personal Property. When it comes to gifting property, you have several options including houses, land, and tangible property. Donors claim a deduction equal to the fair market value of the gifted property, as long as they’ve held the property for more than a year. If you’ve owned the property less than a year, your deduction is equal to the lesser of the property’s fair market value or cost basis.

  • Cash. Cash gifts still qualify for charitable deductions; however, there is no additional tax benefit, like avoiding capital gains. This makes cash the least efficient form of monetary gifting.


Whether your goal is to change the world or impact one life, there are many ways to accomplish it. If you decide to make a difference using your financial resources, consult with your financial advisor and accountant so that you create your legacy in the most efficient manner.

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