Choosing a Charitable Structure for Your Family's Wealth
When families sit down to design their legacy plans, charitable giving frequently emerges as a core value. Setting clear philanthropic goals and supporting them with a defined giving strategy can create an ongoing, sustainable impact that improves your family and your community for generations to come.
But once your family has determined the people and causes that you want to support, figuring out the best way to give can be complicated. Without proper alignment around your goals and your family dynamics, your charitable mission might fizzle out or create financial headaches for your heirs.
Talk to your advisor about adding one of these three giving plans to your family's legacy.
1. Direct Giving
Whether you want to make one lump-sum gift or support a cause in perpetuity, writing a check or setting up recurring electronic payments is about as simple as charitable giving gets. Your family might also consider direct gifts of appreciated stocks, real estate, art, or other valuables. Seniors who are age 70 1/2 and older can also make qualified charitable contributions (QCDs) to charities from their retirement accounts that also count against required minimum distribution (RMD) requirements.
Direct giving is also, potentially, the simplest way to support family members and other loved ones. Under the annual gift tax exclusion, an individual can gift up to $19,000 (2026) per year to anyone they want without triggering any tax consequences.
Simplicity does come at the expense of control. Once a direct gift is given, you lose your ability to influence how it's used. One-time gifts and auto-contributions might also disengage your family from its mission; the checks will keep clearing, but your Why might get lost over time.
Finally, for many folks, recent changes to tax laws have made charitable deductions less beneficial than they once were. If your estate’s tax liability will affect your giving plan, you might prefer other options.
2. Donor-Advised Funds
A donor-advised fund (DAF) occupies something of a middle ground between the ease of direct giving and the complexity of a family foundation.
Essentially, a DAF is a private investment account that you can use to support qualified charities of your choosing. You and your family can make tax-deductible contributions to the fund, including cash, securities, real estate, and other assets. Invested funds grow tax-free. Your financial institution or a sponsoring charity handles all the administration. And you and your family act as "advisors" who recommend grants to qualified charities.
Donors can also name heirs as successor advisors in their legacy plans, which can be a powerful way to keep your family connected to its charitable mission. While they're still younger, letting children and grandchildren have an (unofficial) say in the causes your DAF supports can broaden their view of what wealth is really for and teach some early lessons in budgeting and responsibility.
3. Family Foundations
High-net-worth families with large estates and major giving goals often create family foundations to maintain maximum control of their legacies. These private entities can be set up as a trust or a nonprofit company that's administrated by a family, individuals, or employees.
Unlike a DAF, where the sponsoring organization has the final legal say over grants, a private foundation gives your family complete autonomy over strategy, administration, and grants. Foundations can hire staff, fund and manage multiple charitable programs, and offer immediate aid to people and communities in need during emergencies.
Family foundations are built to last. Which means that they usually come with all the financial and legal complexities of owning a business – as well as the emotional entanglements of working with family members.
Ultimately, the best giving strategy will require careful coordination between family members, as well as your tax and legal teams. We’re ready to help “quarterback” this process so that your Life-Centered Financial Plan can sustain your family’s legacy.
At LI Wealth Management, we believe charitable giving can be one of the most meaningful parts of your family's legacy. The right structure can help your family stay connected to its values while creating a lasting impact on the people and causes you care about. Visit our website or book a free session today. Together, we'll review your Lifeline and create a Life-Centered Financial Plan designed to make your generosity purposeful, sustainable, and aligned with your family's vision.
