The family that gives together: Involving loved ones in your philanthropy

Many people with substantial wealth yearn to create a lasting legacy of philanthropy, bringing their family closer together by involving them in their giving. Building a multigenerational giving plan is more relevant than ever. Over the next 40 years, $41 trillion will pass from one generation to the next in the largest foreseeable transfer of wealth in history, according to estimates from the Planned Giving Design Center. If you’re interested in creating a legacy of giving in your family, here are some tips to help make that a reality.

Taking a moment to reflect

When thinking about your charitable giving, experts advise focusing on the “why” before the “how.” Uncovering your motivations and values is an important precursor that can help you make a plan of action. Asking yourself what you would consider successful giving and what values you want to demonstrate through philanthropy is a good start. You’ll also want to review where you’ve donated and why.

Once you have your giving philosophy firmly pinned down, consider including your family in your charitable planning and giving discussions. Ask your advisor about arranging a family meeting on this topic. This meeting will cover only the financial information you wish to be shared, and will be more productive if all participants have some grasp of the family’s charitable history and come prepared to talk about how they’d like to make a difference in the world.

Developing a plan

Now that you’ve covered the deep motivations, you can turn to the “how,” the technical aspects and strategies that can help you reach your goal of creating a legacy of family philanthropy. Your advisor can help you review all of your options for charitable giving, with tax efficiency and estate planning concerns in mind.

One of your giving options is to create a donor advised fund*, a vehicle that is relatively easy to set up and allows you to involve your family in decisions. You can advise how your donations will be distributed, receive a deduction when it is most tax efficient for you, and give to a variety of charities when it makes sense to distribute. You could also create a donor advised fund for a child to inspire generosity and impart valuable experience in decision-making and financial management (though keep in mind that accounts for minors require an adult advisor). Listing heirs as successors for your donor advised fund can help ensure the legacy of giving continues.

Similar to a donor advised fund, a private foundation can be named in honor of your family, contributions are tax deductible and the donation choices are up to you (with some restrictions). Different from public charities, private foundations do not usually conduct their own charitable operations. It’s also important to note that the activities of a private foundation must benefit the public in order to maintain tax-exempt status. With a private foundation, you have more control over your giving, but that could also come with higher administrative costs.

Other potential methods of giving are charitable trusts, including charitable remainder trusts or charitable lead trusts. An irrevocable charitable remainder trust (CRT) can generate an income stream for donors and other beneficiaries you name, with the remainder (thus the name) of the donated assets going to your designated charity after you pass away. A charitable lead trust (CLT) is similar, but the charity receives the income first for a set period and then your heirs receive the rest.

Deciding together

Philanthropy is something that can help bring your family closer together, all while bringing diverse perspectives to the table to help drive decision-making. With these tips, you can create your own vision of what successful family giving looks like.

*Raymond James & Associates, Inc. and Raymond James Financial Services, Inc. are affiliated with Raymond James Trust, N.A., the service provider for Raymond James Charitable. Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. While familiar with the tax provisions of the issues presented herein, Raymond James financial advisors are not qualified to render advice on tax or legal matters.