Fulfilling Clients' Legacies
Apr 15, 2025
Throughout the year it’s common for professional advisors of various disciplines to reach out with similar questions on behalf of their clients:
“Can our client establish a charitable fund that would be funded upon their passing?”
“How do we name a charitable fund at the Community Foundation as a beneficiary of an IRA?”
“Our client has specific directions for how assets from their estate should be distributed to charities after their lifetime. Does your organization offer anything to ensure their intentions are fulfilled?”
Clients and their advisors may be having these planning conversations given the historic transfer of wealth that is occurring. According to Iowa Community Foundations, in the state of Iowa alone, it is projected that $128 billion will change hands in the next 40 years. Knowing that professional advisors are on the front lines in these discussions, here are some potential solutions the Community Foundation can offer.
The Solution
In response to the types of questions listed above, we would recommend utilizing a “legacy fund”. A legacy fund is a no-cost charitable fund that enables individuals and families to document their charitable intentions and goals to be activated upon their passing.
In short, it is very similar to the language typically found in an estate plan. However, the great part about adding this language to the legacy fund is it allows clients to continually update their goals and wishes as their interests and priorities change, with minimal time and at no cost.
Consider a Legacy Fund If a Client:
- Wants to ensure the causes they care about are supported in the long-term
- Appreciates the flexibility of being able to easily change their charitable intentions during their lifetime without revising their will or trust
- Needs to preserve cash and assets now and/or for retirement but wants to leave a charitable legacy in their community or to encourage future generations to make a charitable impact
- Wants to simplify the administration of their estate for their heirs, executor or successor trustee
What are the Benefits?
- No cost to establish a legacy fund
- No cost to update and amend charitable intentions
- Fully customizable to meet charitable goals
- Legacy funds can be named as beneficiary of various assets, such as a trust/will, IRA or other assets that allow for a beneficiary designation
Examples of How Donors Use Legacy Funds\
- Immediate distributions can be made to their favorite nonprofits, and the remaining amount can establish a field of interest endowment to support one of their favorite, passion areas, like arts and culture in the community.
- An endowment is established in the family’s name that encourages the children to carry on the family’s giving legacy and participation in the community
- Multiple endowments are established for their favorite organizations
How does it work?
1. ESTABLISH
a. Complete a simple agreement to establish a free legacy fund, tailored to match the client’s philanthropic goals.
b. Once established, the client can update their charitable intentions throughout their lifetime at no cost.
2. UPDATE BENEFICIARIES
a. The Community Foundation works with professional advisors and their clients to determine which assets to strategically contribute to the legacy fund (i.e. trust, will, IRA etc.). Once identified, it is as easy as updating the beneficiary designation to name the client’s legacy fund at the Community Foundation of Greater Des Moines, utilizing our tax identification number 42-6139033.
b. This is the beauty of the legacy fund - all the customized and tailored charitable intent language is documented in the legacy fund, while the beneficiary designation simply points the asset to one organization, the Community Foundation.
3. IMPACT
a. Once the legacy fund is activated upon receiving assets after a donor’s lifetime, the Community Foundation will carry out the client’s wishes to ensure their generosity makes a lasting impact.
As always, the Community Foundation team stands ready to be a resource for professional advisors and their clients. Contact us to learn more or to answer specific client questions.