Video 7

Charities You Support

Sadly, most charities have been operating in the dark ages. They don’t know how to show their donors how to convert tax dollars into charitable giving.

To-Do

There’s a classic expression that

“ideas are a dime a dozen, but execution is the key”

That certainly applies in the area of more advanced charitable giving strategies.

Another classic expression is

“what you don’t know you can’t take advantage of and actually might hurt you”

I encourage you to take time to carefully understand these concepts and get the right professionals around you so that you can take advantage of things that could benefit you, your family and causes you care about.

Compartmentalizing your estate might help achieve these goals.

Often people are comfortable with leaving some assets outright with no strings attached to their loved ones. Others might find the use of a trust to protect those assets from spendthrifts, creditors, divorce and predators would behoove the family. If you would consider adding a third bucket to your thinking and that’s a giving bucket. You can let your loved ones take your place in these charitable trust or donor advised funds to make future gifts. They still get to use the asset but they get to use it for giving. It can allow them to continue to make significant impact in their community.

Your family can continue to be a community benefactor or philanthropist. What a wonderful legacy!

Naming a charity as a beneficiary inside your IRAs, annuities or life insurance policies could be a great way to get dollars to charities and keep them out of your taxable estate.

A thought process I’ve seen several caring people consider is that they would weigh their charities equally as if it was “one of their children“. So, if one had three kids who would normally get 1/3rd each, they might structure their affairs where they add the charity and the three children plus their charities get one fourth each.

If you’re facing both state tax and have a large part of your estate in IRAs, that would likely be taxed at maximum individual rates. That is a asset that could make a lot of sense to have a charity as the sole or significant beneficiary.

Your custodian that holds your IRA or the insurance company behind your annuity or life insurance has a change of beneficiary form. Request this and then add to it the charity or charities you would like to receive either all, or a portion of your asset value upon your death. There is also the ability to add them as contingent or secondary beneficiaries. So this example might have everything going to your spouse or a certain amount to the kids initially, but if they were not alive at your time of passing, it would flow down to the named charity.

Again, always, validate these ideas with your legal and tax council because they change overtime.

I believe you could also name your donor advised fund as a partial, total or contingent beneficiary.

As far as approaches that give back a cash flow to the donor; this really needs to be explored with either very strong charities that have the financial strength to make these payments. You can have illustrations run through them for a fixed dollar amount either for joint life or single life. It could start at any time and or be for only a certain period of time.

When it comes to setting up charitable trust, this really needs to entail, very competent tax and legal counsel.

They should be able to run various illustrations showing present tax benefits, future tax consequences, and how it would impact your estate.

There is massive satisfaction of going through this process to be a good stewart of your resources you’ve been blessed with. Godspeed in getting this done well!