Why Is It Important to Consider Philanthropy in Your Estate Planning?
“How much is enough to leave my children and grandchildren?” This is a common question posed in the estate planning process and it is not an easy one to answer. You want to keep your family hungry to find their purpose in life while also providing a cushion for your family to take risks and explore opportunities. Once you can answer the “how much is enough” question, what do you do with the rest of your assets? Philanthropy is a logical place to focus the conversation. As it relates to philanthropy, how do you want to steward your inherited and/or earned wealth? How will your estate planning reflect your values and legacy? This conversation should involve all of your advisors including your attorney, wealth advisor, CPA and philanthropic advisor.
Estate planning is about more than just distributing assets—it’s a chance to define your legacy, express your values, and make a lasting impact. For individuals and families who are charitably inclined during their lifetime, incorporating philanthropy into estate planning can be a natural and powerful extension of the generosity they’ve already shown. And for those beginning to think about their broader legacy, it offers an opportunity to align their assets with the change they wish to see in the world.
Whether your philanthropic vision is modest or ambitious, having a philanthropic strategy integrated into your estate planning ensures your charitable intent is honored and your giving remains impactful for generations to come.
Why Philanthropy Matters in Estate Planning
Thoughtful philanthropic planning as a part of your estate planning can help you distill what matters most to you. You may also update your estate planning several times in your lifetime; you may approach each of these matters in a slightly different way given your stage of life.
1. Legacy Building: Philanthropic estate planning gives you the opportunity to tell your story through the causes you care about. It sends a clear message to your family, community, and future generations about what mattered most to you and what you hope to leave behind.
2. Family Engagement: Including philanthropy in your estate plan can be a meaningful way to bring your family together around shared values. It offers a structured opportunity for conversation, education, and collaborative decision-making—especially across generations. You can share stories with your children and grandchildren about meaningful projects and philanthropic experiences you’ve had.
3. Strategic Impact: Without a philanthropic plan, charitable bequests may lack focus or may be overlooked altogether. With a clear strategy, you can ensure your philanthropy after the end of your life will support causes you trust. Your philanthropic gifts are structured in a way that maximizes their effectiveness.
4. Tax Efficiency: Thoughtful philanthropic planning can also yield tax benefits for your estate and heirs, depending on the vehicles and timing you choose. Donating a portion or all of your assets to nonprofits and/or a giving vehicle can lower the taxable value of your estate, which can potentially reduce estate taxes for your family.
How Families Incorporate Philanthropy in Estate Planning
Every family is unique in their approach to philanthropy—and their estate plans should reflect that. Below are a variety of tools you may use to structure your charitable giving.
1. Outright Bequest: Make a specific dollar amount or percentage allocation in your will to chosen charities.
2. Retirement Accounts: Designate a public charity as a beneficiary of your retirement accounts.
3. IRA and QCD Rollovers: During your lifetime, you can make gifts to nonprofits through Qualified Charitable Distributions (QCD) from your IRA.
4. Life Insurance and Charitable Gift Rider: Name a public charity as the beneficiary of your life insurance policy or create a rider that designates a portion to a nonprofit.
5. Charitable Trusts: Charitable remainder trusts or charitable lead trusts provide income and estate tax benefits to you and your family while also extending a benefit to public charities.
6. Donor Advised Funds: Designated charitable funds housed inside a sponsoring organization allows for flexible charitable dollars to flow over time.
7. Private Foundation: Assets are moved inside a foundation to be granted over a long period of time. This vehicle ensures charitable intent is upheld over generations.
There are many creative tools to express your charitable intent; it is important you work closely with your estate and trust attorney to identify the right mix of tools to meet your goals.
What Should You Consider in Your Planning?
1. Governance: What is the governance structure of the nonprofit(s) to whom you are making an estate gift? How are they maintaining their mission with integrity? What are the governance policies that will guide your private foundation or trust to ensure your intent is honored over time?
2. Time Horizon: What is your desired time frame to make an impact? How far out into the future do you want your philanthropy to extend after your passing?
3. Stewardship: Can the designated nonprofits properly steward your assets? What is their investment policy? Who are the decision makers guiding the policy? What is the longevity of the organization? Should you consider an intermediary to hold the assets to be distributed to the charity of your choice over time?
4. Allocation Amount: Do you designate specific amounts for nonprofits or do you allocate a percentage? If you are considering a bequest, how do you endow your annual gift to an organization?
5. Stakeholders: Who are you trusting to guide your philanthropic intent? Who are the trustees of your trust or your foundation? Who sits on the board of directors of the public charity to whom you are making a bequest?
6. Due Diligence: If you are making a bequest to a nonprofit, where will your assets make the biggest impact? Do you restrict your gift to an endowment, to support a program or to start a scholarship fund? There are a host of due diligence considerations before finalizing your estate plans.
7. Communication: Do you want to communicate to your family your estate plans and why you have made these choices? How do you structure this conversation? Do you want to communicate to the nonprofits that you have included them in your estate plans?
Identifying the potential risks in your planning is critical. You, your family and advising team should come up with contingency plans for your philanthropy inside of your estate. For example, what do you do with your assets if a designated nonprofit no longer exists at the time of your passing?
A Growing Trend: Giving It All Away
In recent years, a growing number of high-profile philanthropists have made headlines not just for how much they give—but for how intentionally they plan to give it all away. The Giving Pledge, launched by Bill and Melinda Gates and Warren Buffett in 2010, has inspired more than 240 billionaires around the world to commit to giving the majority of their wealth to charitable causes during their lifetimes or in their wills.
Some are taking this even further. In 2022, Patagonia founder Yvon Chouinard made global news by transferring ownership of the $3 billion company to a specially designed trust and nonprofit, ensuring that all profits will be used to fight climate change. More recently, Bill Gates reaffirmed his commitment to philanthropy by publicly stating his intention to eventually donate nearly all of his wealth through the Gates Foundation, calling himself “dropping off the list of the world’s richest people.”
These bold actions send a powerful message: philanthropy is not just a footnote in estate planning—it can be the centerpiece. While most families won’t be giving away billions, the principles still apply. Thoughtful planning, alignment with personal values, and the desire to make a difference can shape a legacy at any scale.
Planning Ahead with Purpose
Philanthropic estate planning isn’t a one-size-fits-all process. It should be tailored to your values, your financial picture, and your vision for the future. Whether you’re considering a foundation, a charitable trust, a donor-advised fund, or direct gifts to charity, the key is to start early—and to seek advice from professionals who can help you craft a thoughtful, strategic plan.
By taking the time to integrate philanthropy into your estate planning, you’re not just giving money—you’re making your lasting mark on your family, the world and your community.
About Grant Philanthropic Advisors:
We’re an independent firm helping clients to focus and maximize their philanthropy—in turn, strengthening the fabric of our communities. Founded in 2019, we help donors move from responsive patterns of giving by assisting clients to identify values and become more strategic in their philanthropy. Our goal is to help donors to become more effective as change-makers.
We work with foundations (large and small staff teams), donor advised fund holders, multi generational families, individuals, philanthropy supporting organizations and corporations to design philanthropic strategies.