Legacy Leaders Network

Tips of the week!

Trivia Question❓

Which U.S. president established the Peace Corps in 1961, creating a legacy of service that encouraged Americans to contribute their time and skills rather than just money to causes abroad?

Answer at the bottom of the newsletter

Charitable Trusts vs. Donor-Advised Funds: Which Fits Their Legacy Goals?

When clients begin thinking seriously about their legacy, charitable giving often becomes a key component of the conversation. But as their trusted advisor, it's your job to help them move beyond the idea of generosity and into the strategic decisions that make giving both impactful and efficient. Two of the most powerful tools in legacy-oriented philanthropy are charitable trusts and donor-advised funds (DAFs). While both can serve as vehicles for long-term giving, they offer very different experiences, structures, and benefits — and understanding the differences can help clients choose the path that best aligns with their goals.

Charitable trusts — such as Charitable Remainder Trusts (CRTs) or Charitable Lead Trusts (CLTs) — offer more complexity and control, along with the potential for significant tax advantages. With a CRT, for example, a client can place appreciated assets into the trust, receive income from the trust during their lifetime, and leave the remaining value to charity upon death. This not only reduces estate taxes but can also help clients avoid capital gains tax on highly appreciated assets. Charitable trusts are ideal for clients with larger estates, a need for income, or a desire to tightly manage how and when charitable gifts are made.

Donor-advised funds, on the other hand, are simpler to set up and more flexible to use. A client can make a lump-sum donation to a DAF, receive an immediate tax deduction, and then recommend grants to charities over time. There’s no requirement to distribute the funds by a specific date, which allows for thoughtful, strategic giving. DAFs are a great fit for clients who want to involve their family in ongoing giving decisions, especially those who value ease of use and aren’t ready to commit to the administrative complexity of a trust.

Ultimately, the decision between a charitable trust and a donor-advised fund comes down to intent, involvement, and complexity. Do your clients want to leave a structured, enduring charitable plan that spans generations? Or do they prefer the simplicity of contributing to a fund they can manage year by year?

As their advisor, your role is to illuminate the path that aligns with both their financial strategy and their heart. Because at the end of the day, giving isn’t just about tax efficiency — it’s about creating impact that reflects the legacy they want to leave behind.

💡 Answer to Trivia Question:

John F. Kennedy, who signed the executive order creating the Peace Corps to promote peace and friendship worldwide.