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Legacy Planning and Philanthropy in Your Estate Plan

I often work with clients who want to ensure that they’re not simply planning for themselves or their immediate family, and nurture a deep desire to make a difference in the world through the legacy they leave behind. 


Philanthropy, when integrated into estate planning, not only allows us to extend our impact beyond our lifetime but also reflects our values and commitment to the causes close to our hearts. Incorporating charitable giving into your estate plan can be a powerful way to ensure that your legacy is one of generosity and purpose.


Including philanthropy in your estate plan is more than a gesture of goodwill; it's a strategic move that benefits both the giver and the recipient. For the philanthropist, it offers a sense of fulfilment in knowing that their wealth will continue to contribute positively to the world. It can also provide substantial tax advantages, reducing the estate tax burden and potentially increasing the amount available to other beneficiaries. Furthermore, it helps to instil and perpetuate family values of giving and social responsibility, creating a lasting family legacy of philanthropy.


Structuring Charitable Giving: Trusts, Donor-Advised Funds, and Bequests


There are several ways to structure your charitable giving, each with its own set of benefits.


Charitable Trusts

In South Africa, charitable trusts offer a structured way to support charitable causes while also benefiting from tax advantages. While South Africa does not specifically have a Charitable Remainder Trust (CRT) as defined in other jurisdictions, setting up a trust for charitable purposes can still provide financial benefits both during your lifetime and after. Assets placed in a charitable trust can generate income for you or designated beneficiaries, with the principal amount or remaining assets going to your chosen charity upon your passing. It's essential to ensure that the trust is registered and complies with the Trust Property Control Act, and that the charitable organisation benefits from Public Benefit Organisation (PBO) status for tax efficiency.


Donor-Advised Funds (DAFs)

Though Donor-Advised Funds (DAFs) as known in the US are not a common feature in South African philanthropy, similar outcomes can be achieved through donations to umbrella nonprofit organisations that manage funds on behalf of donors. Contributions to organisations with PBO status can be tax-deductible within the limits set by South African law. This allows donors to contribute to a fund, see their donation grow over time, and advise on how their donation is used by the charity, albeit within a more informal framework than DAFs.


Bequests

Leaving a charitable bequest in your will is a straightforward and effective way to ensure a lasting legacy in South Africa. By specifying in your will that a certain amount of money, a particular asset, or a portion of your estate be donated to a registered charity or PBO, you can make a significant impact on causes you care about. Such bequests can also offer estate duty benefits, as the value of the donation is deducted from the value of your estate before estate duty is calculated, potentially lowering the estate duty payable.


Selecting the right causes to support with your estate is deeply personal and reflects your values, passions, and the impact you wish to make. Engaging with charities during your lifetime can provide valuable insight into how they operate and the differences they make in each community.


To ensure your philanthropic efforts have the most significant impact, it's essential to work with experienced legal and financial advisors who specialise in charitable giving and estate planning. At Bespoke Financial Services, we are dedicated to helping you navigate the intricacies of legacy planning and philanthropy. Let us guide you through integrating charitable giving into your estate plan, ensuring your legacy makes a lasting difference in the world.


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For personalised advice on including philanthropy in your estate plan, reach out to us today. Together, we can create a legacy that not only reflects your values but also contributes to a better world for future generations.

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