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Charitable giving shouldn’t be viewed as an afterthought for investors or be confined to a year-end conversation with advisors focused on maximizing tax savings. Rather, a thoughtful philanthropic plan can serve as a powerful tool for advisors to help investors engage in legacy planning, strengthen family relationships and optimize tax management.
This is particularly relevant as an unprecedented generational transfer of wealth is underway.
In the next three decades, U.S. baby boomers, born between 1946 and 1964, are on track to transfer an estimated $79 trillion to their beneficiaries in the largest wealth transfer in history. This cohort is also expected to give an additional $18 trillion to charitable causes, according to a report by the consulting firm Cerulli Associates.1 The silent generation, born between 1928 and 1945, and baby boomers now represent more than three-quarters of the investors at high-net-worth practices. These investors represent a unique opportunity for financial advisors to connect with investors on estate planning and philanthropic giving.
Advisors are uniquely positioned to help investors speak with family members to create a shared philanthropic vision.”
Charitable giving can strengthen family ties
A good charitable plan allows investors to give to their preferred causes while preserving their wealth and plans to transfer their assets to family through an estate plan that may include lifetime gifts and gifts that occur at death. The estate and charitable giving planning process generally requires cross-generational buy-in and collaboration.
Advisors are uniquely positioned to help investors speak with family members to create a shared philanthropic vision. Conversations about planning for charitable giving can serve to strengthen investors’ relationships with their families and help forge better collaboration with financial planners. Nearly all high-net-worth individuals (97%) said conversations with professional advisors about charitable giving are important, according to a survey by The Philanthropic Institute.2
Such interactions provide advisors with meaningful insight into investors’ priorities, helping support more comprehensive planning and a tailored advisory experience that extends beyond investment management.
Considering the tax implications of different gifts
Advisors can help investors select assets for charitable gifts and designate recipients by presenting solutions that seek to preserve capital and maximize federal income and estate tax savings.
Currently, the federal lifetime gift and estate tax exemption, set at $15 million for single taxpayers for 2026 and $30 million for married couples, allows investors to give large monetary amounts during life or death to individuals, or trusts for their benefit, without incurring federal gift or estate tax. Gifts to tax-exempt charitable organizations during life may qualify for federal income tax charitable contribution deductions and reduce the size of the donor's estate for federal estate purposes.
Meanwhile, gifts to tax-exempt charities at death may qualify for the charitable deduction, which reduces the donor's estate for estate tax purposes, and such gifts do not count against the donor's federal lifetime gift and estate exemption amount. Consequently, certain assets may be more advantageous to leave to charitable organizations than individual beneficiaries when the potential income tax consequences are considered.
For instance, distributions from inherited 401(k)s, IRAs and annuities given to individual beneficiaries are subject to federal income tax and can have time constraints or limitations. Unless the beneficiary is a surviving spouse or eligible designated beneficiary,3 current federal tax rules require beneficiaries to withdraw the full balance of such savings within 10 years, potentially creating a significant and unexpected amount of taxable income.
Instead, advisors may recommend that investors leave appreciated securities to family members. Beneficiaries may then benefit from an adjustment in basis to fair market value at the time of the donor's death, which may eliminate capital gains tax if the beneficiaries sell the investments shortly after inheriting them.
In the case of qualified retirement assets, advisors can also suggest that investors name a donor-advised fund (DAF) as a beneficiary for charitable giving. DAFs may be especially attractive to investors in states with state gift tax and estate tax exemptions that are substantially lower than the federal exemption because this method may reduce an investor’s taxable estate.
Using a donor-advised fund (DAF) for charitable giving
A DAF is operated by a public charity and offers investors a turnkey approach to streamline their giving and tax management while avoiding the costs and administrative responsibilities associated with the management of a private foundation.
This flexible structure supports more strategic giving and can establish a multigenerational charitable legacy. Donors may specify a percentage or dollar amount to go to charities over time—even after their death—and appoint family members as successor advisors to continue giving in the family’s name.
This approach can help preserve an investor’s philanthropic vision beyond the investor’s lifetime while enabling family members to carry the donor’s legacy forward.
Bottom line: Charitable planning conversations can help advisors strengthen their relationships with investors, reveal donor priorities and differentiate their practice. Thoughtful asset selection and the use of DAFs for charitable gifts can help improve tax efficiency and preserve an investor’s philanthropic legacy.
1 Cerulli Associates, High-Net-Worth and Ultra-High-Net-Worth Markets, The Great Wealth Transfer: Capturing Money in Motion, 2024.
2 The Philanthropic Institute (TPI), Study of the Philanthropic Conversation, 2026.
3 Eligible designated beneficiaries are defined by the Internal Revenue Service as a spouse or minor child of the deceased account holder; a disabled or chronically ill individual; or an individual who is not more than 10 years younger than the IRA owner or plan participant.
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Disclaimer
The views expressed are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance strategy. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.
Contributions to charitable organizations generally cannot be rescinded or changed. Donors should be motivated by charitable intent. Charitable giving vehicles should not be treated as, and are not designed to compete with, investments made for private gain. An intention to benefit a charitable organization should be a significant part of the decision to contribute.
Eaton Vance does not provide tax or legal advice. Nothing in this insight should be construed as tax advice. The discussion is general in nature and is not intended to serve as the primary or sole basis for investment or tax-planning decisions. Prospective donors should consult with a tax or legal advisor before making any decision to donate.
Investing entails risks and there can be no assurance that Eaton Vance will achieve profits or avoid incurring losses. All investments are subject to potential loss of principal. The views and strategies described may not be suitable for all investors.
Eaton Vance is part of Morgan Stanley Investment Management, the asset management division of Morgan Stanley.
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