Campaign: Lifetime Legacies

• Introduction
• Detailed proposals
• The coalition
• Documentation

Introduction

Lifetime Legacies are a form of split interest trust, much used in the United States since the late 1960s. They allow a donor to make an irrevocable gift to a charity during their lifetime, of shares, property or cash, while retaining the benefit of the income or use of the gift for the term of their life. The donor can make deductions against capital gains tax at the time of the gift and its value is not counted as part of their estate for the purposes of inheritance tax.

Some charities currently benefit from gifts like these, made through trusts set up for the purpose in the United States. They have been able to use them as part of their working capital, as security against finance for capital projects.

The Liftetime Legacies coalition believe that many people who do not currently feel able to make a significant commitment of support to charity, because of their existing commitments, would feel able to take advantage of this opportunity. It would allow charities to grow support in a new community of donors.

Detailed proposals

Tax-effective Charitable Remainder Trusts would provide added flexibility to the charitable fundraising community. The sector most favours CRTs because they resemble a charitable legacy or deferred gift with several important advantages for both charities and donors.

• The charity receives a clear and irrevocable commitment from the donor. This offers greater security than legacies, which do not always materialise.
• The charity can rely on eventual receipt of a lump sum; this would have critical impacts on fund-raising for capital projects or endowment-building, both of which require sums in substantial tranches. For a major building campaign, for example, a charity could undertake capital expenditure commitments secure in the knowledge that committed funds would be forthcoming.
• The CRT means that the promised future gift can be acknowledged by the charity, thereby deepening the donor's involvement with the charity during his/her lifetime.
• CRTs address the issue of potential donors' fears about financial insecurities in old age and their desire to safeguard their future income needs.

The experience of UK charities that raise donations in the United States demonstrates the effectiveness of CRTs in encouraging a certain type of donor. They would unlock new money for charities. Individuals who wish to make a commitment to charity, but who are unable or unwilling to release assets immediately are attracted by CRTs because of the security they offer of an assured income during their / or a specified beneficiary's lifetime, after which the capital passes to a charity under the terms of the trust. Experience in the US also demonstrates that a CRT gift frequently leads to enhanced giving by the donor.