Aligning Wealth with Values: Your Roadmap for Strategic Charitable Giving

Estate planning focuses on the legal transfer of documents and financial accounts, but legacy planning is the intentional, values-driven process that determines where those assets go and why.

A truly purposeful wealth transfer starts with defining your intent for your legacy, then creating a strategic plan that aligns your wealth with that vision. This includes planning for both family security and the philanthropic imprint you wish to leave on the community. Read on for questions that help define your intentional giving journey.

What Are Your Intentions and Values?

Reflect on your core motivations before designing your financial plan. You have focused on preparing your assets for your family, now focus on preparing your family for your assets.  Define the principles that will guide your giving (to your next generation or charities).

Why Do You Want to Give?

Before you structure a gift, it’s important to define the motivation behind it—your why. People often give for deeply personal reasons, including personal fulfillment, supporting a cause close to the heart, strengthening their community, or for tax efficiency. 

Who Will Be Involved?

Strategic giving usually involves collaboration with your spouse and may include engaging your children and grandchildren in the process. A trusted advisor can help you foster open communication that shares your intentions and prepares the next generation for the responsibilities that accompany wealth.

What Assets Should You Give?

Charitable giving is not limited to cash. Expanding your strategy to include other assets can dramatically increase tax efficiency:

• Donating appreciated stocks or mutual funds held for over one year can be highly beneficial, potentially allowing you to avoid capital gains tax while claiming a deduction for the full fair market value.
• For larger gifts, non-cash assets like real estate or business interests (including privately or closely held stock) are an option and require careful planning.
• Other valuable non-cash options include tangible personal property (such as artwork or collectibles), cash value life insurance, and cryptocurrency. 

When Should You Start?

While year-end is a common time for gifting, strategies involving non-cash assets require advanced planning. Opportunities to start or reassess your giving include:

• Receiving an inheritance.
• Retirement or a business sale.
• Changes in tax legislation.

How Will You Structure Your Gift?

The vehicle you choose determines the timing of your gift, the tax benefits you receive, and the level of control you retain.

• Donor-advised funds (DAFs) are a popular and flexible tool. DAFs allow you to receive an immediate tax deduction when they’re funded, while reserving the actual distribution of grants to charities for later. 
• Qualified charitable distributions (QCDs) work well for individuals 70 ½ and older. A QCD allows you to make tax-free transfers directly from your IRA to a qualified charity, satisfying your required minimum distribution (RMD) without increasing your taxable income.
• Charitable trusts (like charitable remainder trusts) are typically used for larger gifts or large estates where the donor wishes to create an income stream for themselves or heirs before the remaining assets are passed to a charity.

Guidance for the Journey’s End

Executing a plan that secures both your financial assets and your family’s core principles requires strategic alignment. This is where Ledyard steps in.

Ledyard provides the perspective and scenario testing necessary to ensure your giving strategy is coordinated seamlessly with your overall financial and estate plans. Our advisors work with your attorney and CPA to ensure your intentions are honored, and your wealth is efficiently transferred.

Don’t wait to start the journey. Contact us today to begin defining your legacy.