Help Your Clients Create a Legacy Through Charitable Giving

Have you ever admired great works of philanthropy only to wonder what legacy you will leave behind? People are hardwired to care about the legacy they leave whether it’s financial, philanthropic or otherwise. One of the best ways for advisors to educate clients about legacy-building and charitable giving is by sharing a personal experience. But even if you can’t donate a single premium life policy to your favorite institution or leave a significant endowment to your beneficiaries, there are still ways that advisors can take the lead when it comes to charitable giving and helping clients build a legacy.

Legacy-Building With Charitable Giving

One way for clients to create a legacy, albeit an increasingly difficult way as average life expectancies continue to increase, is by not outliving or spending all of their retirement assets. For some clients however, one of the most common ways that legacies are built is through charitable giving. With the many rules and nuances associated with charitable funding vehicles and giving strategies, advisors who want to provide intricate and valuable advice often need an advanced financial designation or specialized training.

Advisors in the Chartered Advisor in Philanthropy® (CAP®) course at The American College of Financial Services learn about the limited tools and specific gifting strategies to use when estate planning with clients. Each tool serves a particular gifting strategy and plays a crucial role in estate planning. These tools are:

• Charitable remainder trusts (CRTs) - the value of a trust— this can be a piece of property, acreage, or another asset— is donated to a charity, in exchange for a tax-free annual annuity and charitable tax deduction for the donor.
• Charitable lead trusts (CLTs) - designed to provide income payments to at least one qualified charitable organization for a fixed period of time, CLTs can be funded while the grantor is alive or used to minimize estate taxes if funded at the grantor’s death
• Charitable gift annuities - results in a tax-free annuity and charitable tax deduction for the investor, and a financial gift for charity
• Direct bequests to a charity, supporting organization, donor advised fund, etc.

Philanthropy as Part of Estate Planning

For many advisors, actively working with charities is a satisfying and rewarding aspect of their career. Clients that haven’t considered philanthropy as part of their estate or legacy plan may not understand the many benefits, financial and emotional, of such a strategy. It is up to the advisor to educate their clients on various legacy-building options and charitable giving tools. Using philanthropy as part of a client’s complete estate plan is an excellent way to decrease their taxable assets and create a lasting imprint on the world.

The charitable giving strategy that’s ultimately chosen will depend on the specific needs, beliefs and desires of your clients. It can be difficult helping clients articulate themselves when it comes to emotionally-charged topics like their highest aspirations for self, family and society, but it isn’t impossible. Exercise empathy, kindness, and patience when having these types of conversations.

Advisors find that conducting a comprehensive factfinder, asking abundant, thoughtful and detailed questions, can uncover organizations and causes that are close to clients’ hearts. Good questions to start the conversation are:

• Do they have any interests other than family and business?
• Do they currently support an organization or cause?
• Do they serve on any boards or volunteer anywhere?
• What activities or events bring them joy?
• Are there people, places, things or circumstances that make them emotional?

There is more than one way to build a legacy and contribute to charity, the final recommendation will depend. Choose the giving vehicle and strategy that best accomplishes your client’s unique desires and specific goals.

How Can Advisors Learn More?

One of the best ways for advisors to learn more about complex topics like taxes, retirement income and legacy-building through charitable giving is through first-hand experience, but not all are fortunate enough to enjoy this opportunity.

Another way is to study for an advanced financial designation like the CAP®. The CAP® course of study takes a deep dive into the process of philanthropic planning and role that charitable giving plays. It also reviews specific tools, taxes and gifting strategies for advisors to use when estate planning with clients. Gift planners who serve high-capacity donors and fundraisers make excellent candidates for the CAP® designation as do existing financial advisors with or without prior credentials.

Can you confidently answer your clients’ questions about legacy-building and charitable giving? Increase your expertise in complicated topics like taxes, retirement income planning and charitable giving, read 5 Steps for Planning Retirement in a Rising Tax Environment.