Planning Today for Your Family Legacy of Tomorrow

by Kaye M. Ridolfi, Senior Vice President of Advancement

If you’ve ever sat down to do succession planning in your business or personally through a living will, it’s easy to appreciate the level of sophistication needed to ensure continuity beyond your own lifetime. The same level of philanthropic strategy and planning can be just as helpful to instill charitable values in the next generation and create a lasting legacy.

Selecting the Right Charitable Tools

With a multi-generational goal in mind, there are several philanthropic tools worth considering in conjunction with the financial planning that you may already have underway with a professional advisor. These include donor advised funds and supporting organizations (family foundations), named funds, bequests, trusts and annuities. This variety of options can deliver over and above the value of routine “checkbook giving,” which is how people often begin their philanthropy.

If you are interested in involving your children or grandchildren in giving, then the donor advised fund and supporting organization are extremely effective tools. These vehicles can be established with various liquid and non-liquid assets — including appreciated securities and even closely held stock. If you choose, family trustees and other advisors can join you in making decisions, and you may also appoint successor advisors. Working with an organization like the Cleveland Foundation can help generations of trustees and advisors carry out their grantmaking to nonprofit organizations, matching the intent of your original gift.

In other cases, you may prefer to make a gift through a designated or named fund and have the foundation carry out your wishes in perpetuity. The same is true with bequests, which can be one of the most straightforward ways to provide for the community in the future. Tools like charitable annuities and trusts are also attractive legacy planning options, providing immediate tax benefits and also generating income to you or others.

These philanthropic vehicles can also help you realize real tax advantages, especially when they are established before the sale of a business or the transition of an estate. In certain scenarios, you may even be able to convey a tax-deductible gift without reducing the amount of your children’s inheritance. It’s important that you choose a philanthropic advisor that can design a model that accounts for certain tax situations, a time horizon and family needs to assess the advantages and predicted outcomes of a certain gift approach.

Determining a Family Mission Statement

In addition to being easy and cost-effective, your charitable giving should be strategic and focused on the causes you care about most. Determining a philanthropic mission statement is an important activity for donor families of all configurations. An optimal family mission statement is designed to evolve as time passes, community needs shift, and your successor advisors become involved in giving.

A family mission statement takes into account the philanthropic passions of each member and converts them into purposeful impact in areas like basic human services, education, job creation, and arts and culture. Based on personal experiences and your life journey, it’s usually easy to determine the charitable causes that mean the most.

Organizations like the Cleveland Foundation can help you understand which nonprofits — locally and nationally — are making the greatest impact in these areas, the level of support needed, and the impact such charitable investments can have in our community.

Passing the Torch

You and your family have a unique opportunity and deserve a personalized approach to legacy planning. Having proactive discussions about your long-term philanthropic goals is one of the best ways to ensure your wishes will be carried out and you and your loved ones will have the gratifying experience of supporting our community for generations to come.

The original version of this article appeared in the 2015 Crain’s Cleveland Business Estate Planning Issue.