On Philanthropy / tj sudol

Recent research shows that 89 percent of gifts in estate plans are charitable bequests.  In fact, a charitable bequest is an ideal way to fulfill a lifetime of charitable giving for your favorite charity, church, alma mater, or other cause.  Whether you have a Will or a Trust for your estate plans, a charitable bequest is the #1 way to make a testamentary gift. If you have already included a charitable bequest in your estate plans, you have ensured your legacy gift will make a difference for years to come.  If your intention is to create an endowment by your bequest, your support will help in perpetuity. If you have not yet made arrangements for a charitable bequest, it’s relatively easy – and you don’t need to create a new Will or Trust – a Codicil (for your Will) or an Amendment (for your Trust) is sufficient.

It’s important to check with your favorite charity, college, or church about the exact language you should use for your charitable bequest – to be sure what you want to do will be done.  The key thing is to ask your lawyer to prepare the provision for your charitable bequest so you can sign the documents promptly and then rest easy in the knowledge that your desire to make a testamentary gift will be fulfilled according to your wishes.

And, in most cases, your charitable beneficiary will recognize your generosity in a special way. For example, your alma mater likely has a Legacy Society to recognize everyone who remembers the institution in their financial & estate plans.  Typically, members of Legacy Societies gather at reunions and other special events.  Hospitals, churches, and other charities also honor donors of testamentary gifts in similar ways.  Of course, if you prefer to let the charity know of your plans but otherwise keep the matter confidential, you can be sure your charitable beneficiary will respect your request for privacy.

Things like college tuition bills, mortgage payments, health care costs, and retirement savings sometimes make it difficult to do what we want to do for the charitable organizations we support during our lives.  A charitable bequest offers a way to make the gift of a lifetime at a time when doing so at last may be possible.  You don’t have to be a Vanderbilt or a Carnegie to make a difference; every charitable bequest touches the lives of others in special ways.

Hmmmm, a loan… “You want me to make a loan to my favorite charity?”

YES! Okay, so it goes by another name – but that’s the idea. Here’s how it works:

You want to do something for a charitable organization in your local community (or your church or alma mater) – and, it’s something that can really make a difference. BUT, you have a family to worry about – children or grandchildren…. their college educations, their first homes, their first business venture’s capital. You have some money available right now, sure – BUT, they will need that money from you in 15 or 20 years. So you’re concerned that if you give it away now, you’ll have nothing for them later.

Ah, that’s the dilemma. You’re not alone. Many families face the same situation. Here’s the solution:

Two simple steps – First, you put the assets you know you want your children (or grandchildren) to have in 15 or 20 years (or however many years later you wish) into a trust – so that the assets are safe and secure – and you name the family members you intend to help later as the ultimate beneficiaries of the trust. Second, you name the charitable organization that you want to help right now as the trust’s immediate beneficiary. You do this with a simple designation in the trust document.

Once you’ve done these two steps, the charity will receive an annual gift derived each year from the earnings on the assets in this trust – and the principal in the trust will be preserved for your family’s later use. In this way, you would effectively be ‘loaning’ the benefit of trust assets to the charity for a period of years – for example, to start a new program or get past a rough patch in the economy – until the next generation in your family needed the money for their own purposes.

You would be making a very special gift to support the charity each and every year until the trust is scheduled to terminate. And, when the trust runs to the end of the years you established when you created it, the assets in the trust will go to your designated family members for their use.

Beyond the value that these annual distributions from the trust have for the charity, you also gain a few other advantages in doing this. You see, the overall value of the assets in the trust likely will appreciate at a rate higher than the annual payout for the charitable gifts – and, this means your family members could very well end up with more at the end of the trust than you put into the trust initially – and, whatever the amount – they will receive the full amount of the principal in the trust free of taxation, if you design the plan well. And, you’ll gain a few tax-wise benefits from this plan, too.

Hard to create? No, actually it can be quite a simple thing to do. Do you have to be a Vanderbilt or a Carnegie for this to make a difference? Not at all! It just may be an ideal way to add great value in your life, for your family, and for your favorite hospital, church, college, or other charity.

P.S. TO ENTREPRENEURS – The kind of arrangement described above can be a creative strategy for conveying a privately held business to the family’s next generation. By combining this trust – which is called a Charitable Lead Trust – and a Family Limited Partnership you can strategically structure an effective way to achieve valuable family and philanthropic objectives. Something worth considering.

The financial markets seem to be moving in a good direction recently – maybe a good sign that we’re on the right track.

But, for many, portfolios are still not much above where they were in 2008 – and, in some cases, they still may be below their pre-recession levels. And, not just your portfolio has struggled – so too have the portfolios of your favorite charitable causes… you local community organizations, your hospital, your alma mater, your church. While the need for action is great, the financial resources to fuel that action remain quite limited in many cases.

Is there something creative you can do right now to make a difference?

In fact, there is something very creative you can do now – that will have a big impact both now and later.

Say you have the desire to create an endowment – a legacy gift – that will last forever, perhaps to support a special program in your local community. Or provide scholarships at your alma mater. Creating an endowment may be beyond your reach right now. In fact, it may not be something you can do until much later – perhaps not until your executor is administering the Will you leave to direct the distribution of your estate.

The truth is that a bequest is the only chance most folks have to make a large gift.

But, with a relatively small annual gift, you can make a gift now that is the equivalent of what the organization would receive as income from an endowment. Here’s what I mean: You can bring to life your ultimate bequest right now – and, you can do so with an annual gift you likely can afford to make.

Then, at the time of your death – when the bequest you provide for in your Will finally is available for distribution – the gifts you’ve been making each year will be covered by the income derived from the endowment funded by your bequest.

This little two-step is a creative way to start having an impact now AND ensuring that you will be making a difference for generations to come.

How much will it take to make this happen?

Let’s say you want to support a special program or create a scholarship at $2,000 every year. That would require an endowment of $50,000. So, you could provide for a bequest of $50,000 in your Will to create the endowment. And, if you already have a Will, a simple Codicil can be used to add this gift to the terms of your Will. Then, you can plan to make annual gifts of $2,000 each year to provide immediate support for the special program or to make this new scholarship available.

Here’s the added advantage of this plan: You’ll get to see the impact of you generosity now, while you’re around to appreciate the value of your gift. If you just made the bequest and did nothing more than that, you’d never see this impact or, in the case of a scholarship, actually meet the students whose lives you touch.

There are great needs for people to do what they can to help. If you can make even small annual gifts and arrange for a large gift in your estate, you would be a philanthropic hero.

Got a question, just use a comment to let me know.

When you make a charitable gift to support a worthy organization’s work –
whether it be to support your alma mater, your church, or an organization in your community that you want to help in a special way or for a special purpose – it’s important that a match exists between your understanding about the gift, as the donor, and the organization’s understanding, as the beneficiary of your generosity. 

Above all, you want to be certain that there is no doubt about how the gifted funds are to be used by the organization.

Hmmm, sounds simple, huh?  Downight basic, right?  Well, sometimes it is.  Sometimes, this clear mutual understanding of the donor’s intent is accomplished quite easily and with minimal discussion or paperwork. But, often it’s a good idea to talk things over and write things down so that everyone involved is sure of your intent as the donor – and, equally sure that the charitable organization can carry out these intentions.

This is especially true when the amout involved is substantial. Ah, and what is ‘substantial’?

Well, like beauty and works of art, the defining point for ‘substantial’ may best be measured by the eye of the beholders. Whether a gift is for $1,000, $10,000, $100,000 or a million dollars, the degree of detail that goes into the discussion likely depends as much on the donor’s views as on the charitable organization’s size and scope.

One way or another, if you’re making a gift to your alma mater or other charitable cause and you want to know that the gift will be used as you intend, the best way to be sure is to talk about it before you make your gift – and, then look for this plan to be placed in a writing.

This is the role and value of Gift Agreements.  Such a document is the ideal place to describe in clear and complete terms the donor’s intentions and confirm the organization’s commitment to fulfill the donor’s expectations. A Gift Agreement can be as simple or complex as a particular gift plan merits. The key is that it provides you, the donor, with the assurance that your alma mater (or other charitable cause) will use your gift in the manner you expect it to be used.

This is especially important when you intend for your gift to last in perpetuity – that is, for generations to come – as part of an endowment.  A Gift Agreement provides you and your family a confidence that your gift will be making a difference for years to come.

Have a question, want more information – your inquiries are invited.

We all are asked to make financial contributions to charitable organizations from time to time – sometimes, it seems, day after day. It most cases, we’re asked to give to organizations and causes we know little about. Alas, sometimes that’s even true when the cause is our own alma mater. It’s hard enough to keep track of things on our daily To Do lists, let alone stay current with the ever-changing campus of the college or university we attended more years ago than we want to count. In our hearts, we know we’d like to do something for our alma mater – make a gift that is meaningful – but, it’s been so many years. . .

What’s the answer?

Get involved! Next time you’re invited to serve on a committee or council, plan an event or a program, sponsor an intern, or participate in an alumni community service project, say “Yes!”

And, you’ll be glad you did.

So will your alma mater – because one thing that is as true today as it ever has been is that those who give the gift of their time and talents – as volunteers – are also more likely to give the gift of their treasures – their financial resources. It doesn’t matter so much whether you serve on the Board of Directors or the annual Beach Party planning committee – what matters is that you have made the commitment of your time to something that is important to you.

In taking this step, you have helped yourself answer the question “Why give?” Now, you’ll know!
So, call someone today that you know at your alma mater and offer to volunteer. You may be surprised at the opportunities awaiting you!