Planned Giving

Planned giving is the discipline of building charitable gifts into a person's estate and financial plan, rather than making them as spontaneous outright donations. The defining feature is that the gift is either deferred, taking effect at or after the donor's death, or delivered through a structured arrangement such as a trust or an annuity, so that it has to be coordinated with the donor's other goals, income needs, and heirs. Charities often run a separate "planned giving" or "legacy giving" office for exactly this reason: these gifts involve estate documents, beneficiary forms, and multi-year relationships rather than a single transaction.

The useful line to draw is between an outright, current gift and a planned one. A current gift (cash, appreciated stock, a grant from a donor-advised fund, or a qualified charitable distribution) leaves the donor's hands now and produces its tax result now. Charitable giving strategies as a whole include both kinds. A planned gift is the future or structured subset, and it splits again along a line that matters:

• Revocable planned gifts keep the donor's control. A charitable bequest in a will, or a charity named as the beneficiary of a retirement account or life insurance policy, can be changed at any time and gives up nothing during life. Because the donor still controls the asset, there is no income-tax deduction now; the benefit is an estate-tax charitable deduction at death.

• Irrevocable planned gifts commit the asset now in exchange for a benefit that is split between the donor and the charity. A charitable gift annuity and a charitable remainder trust each locks in a transfer today and produces a partial income-tax deduction now, measured by the present value of the interest the charity will eventually receive. A charitable lead trust reverses the order, paying the charity first and the family afterward, and its income-tax treatment turns on how it is drafted: section 170(f)(2)(B) allows an income-tax deduction for the charity's lead interest only where that interest is a guaranteed annuity or a fixed percentage of trust value and the donor is treated as the owner of it under the grantor-trust rules. A nongrantor lead trust gives the donor no income-tax deduction at all; the trust itself gets a deduction for what it pays to charity, and the donor's benefit is confined to the transfer-tax side.

This is why planned giving is treated as its own field. Choosing among a bequest, a beneficiary designation, a gift annuity, and a charitable trust is really a question about how much control and income the donor wants to keep, when the tax benefit should land, and how the gift fits with what passes to heirs. The mechanics of each vehicle, and the full menu of current techniques, belong to those vehicles' own pages; planned giving is the frame that decides which one fits.

Planned giving usually follows the arc of an estate-planning conversation rather than a single donation:

1. The donor decides how much they want to leave to charity and how much control and income they want to keep during life.

2. They match that goal to a vehicle: a revocable bequest or beneficiary designation if flexibility matters most, or an irrevocable gift annuity or charitable trust if a current deduction and a lifetime income stream are the point.

3. The gift is documented in the right instrument (a will or trust amendment, a beneficiary form, a gift-annuity contract, or a trust agreement) and coordinated with the rest of the estate plan.

4. The tax benefit lands where the structure dictates: at death for a revocable gift, or partly now for an irrevocable one.

Consider two donors who each intend to leave $100,000 to a museum. The first names the museum in her will. Nothing changes on her tax return during life; her estate takes a charitable deduction when she dies, and she can revise the gift any time. The second instead funds an irrevocable charitable remainder trust now: she gives up control of the $100,000 but earns a partial income-tax deduction this year and receives income from the trust for life. Same charitable intent, two very different planned gifts, chosen on control, income, and timing.

Pros

• Lets a donor make a larger charitable impact than current cash flow alone would allow, by using assets that transfer later.
• Coordinates giving with the estate plan, so charitable and family goals are weighed together.
• Some structures return lifetime income to the donor while still benefiting charity.
• Revocable forms cost the donor nothing during life and remain flexible.

Cons

• Irrevocable planned gifts give up control of the asset permanently.
• The vehicles can be complex and often need legal and tax help to set up correctly.
• A deferred gift may never materialize if the donor's circumstances or wishes change and a revocable arrangement is not updated.
• Structured gifts carry set-up and administrative costs that a simple donation does not.