The ILM has been consulting members since April about the proposal for it to become part of the IoF.
The umbrella body for legacy professionals said that once the ongoing consultation was complete, its priority would be to review the outcome and assess the most appropriate way forward with its members and partners.
"We have notified the IoF of our decision not to progress discussions further at this time," the ILM board said in a statement, adding that it had been going through a "period of reflection" since the summer.
The merger proposal, which was first announced in April, would have involved the ILM being dissolved as a company and its three members of staff joining the IoF.
The ILM would have become a special interest group of the IoF. The special interest groups collectively elect one person to join the IoF board.
Maria King, interim chair of the ILM and solicitor and head of legacy administration at Cancer Research UK, said in a statement that members and corporate partners had been notified of the decision to shelve the merger.
She said that the IoF had also been informed by an email to Peter Lewis, its chief executive.
The ILM has been without a chief executive since Simon West left in September because of health reasons.
Chris Millward – who is head of legacies at Save the Children – will hold the role of interim executive director at the organisation one day a week for a three-month period in order to oversee the consultation process and ensure day-to-day business continuity.
Helen Hoare, its chair, and another trustee, Andrew Sawbridge, also stepped down from the board in September after ILM members voted against the merger in a poll conducted by the ILM board before its annual conference in May.
At the conference, members also spoke of their unhappiness at the proposal, accusing the ILM board of trying to rush it through.
One of these, Crispin Ellison of the consultancy Legacy Link, told Third Sector today that he was pleased by the decision not to merge for the time being. "I’m not convinced there would be greater awareness about legacy management through the IoF," he said.
"The ILM would have become another special interest group, and that would have not have enhanced its standing or ability to influence. I do agree that there are areas where stronger links with the IoF could help – specifically in reaching a wider regional organisation in training – but such benefits can be achieved through stronger working links, not through a merger."
Ellison said he was unsure of how permanent ILM’s decision on the matter was, but that he intended to ask this question at the organisation’s annual general meeting next month.
Ellison, who was a member of the group that established the ILM in 1999, said he was approached by the IoF about a merger back in 2001, but that he declined the proposal.
In a statement, a spokesman for the IoF said: "We completely understand ILM’s decision to undertake further consultation with its members as it decides on the best way forward.
"Legacy fundraising and management are vitally important to generating funds for charities. We are always looking to create the best environment for fundraising and are happy to look at how we can work with other organisations to achieve this."