man-superhero-standing-on-clif

You are, or can be, a super hero. You have the ability to change the world, or at the very least, your little corner of it. You can affect this level of change just by asking yourself one simple question: what causes would I like to benefit in my will?

Bequests to Charities in Your Will

Yes, that’s right. You can include the nonprofits you care about most in your will, leaving a legacy after you have passed on. And, it doesn’t cost anything extra! Just the assets you’re choosing to gift. You can include charities like your church, alma matter, a local cause, or an international organization in your estate plan. And, if you ask the charity you care about most, I’ll bet they’ll tell you that the result of your charitable bequest, no matter how big or small, can make a huge impact.

What About My Kids?

When folks come to me for estate planning help, a major reason they do so—perhaps even the single reason they do so—is to benefit their children. Parents often think, “I love Charity X, but of course I love my kids even more, and I’ve got to take care of my family.” Of course you do! And, of course you should!

superhero-costume-children

How Much Is Enough?

But, ask yourself another question: How much is enough for my kids? If you have lots of assets, and/or your children are adults, and successful on their own, could you provide adequate support for your children and still also include a bequest to one of more charities?

Let’s Talk

Invite the whole family to the kitchen table sometime (even if your kitchen table is a virtual one, via email) and talk about the distributions you want to make at death. Ask if including gifts to charity from your estate plan would be appropriate and acceptable to the kids. Perhaps it’s a charity the whole family supports. Perhaps this will be the beginning of a multigenerational cycle of giving.

Why not talk about it? This can be an especially productive conversation if you can explain that taxes are going to eat up a lot of one or more of the assets anyway, and this can be avoided by giving said asset(s) to charity (since charities are tax exempt).

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Life Insurance

Sometimes when parents give a major asset(s) to charity, and their kids’ inheritance takes a real hit, they’ll buy a new life insurance policy to make up the shortfall to the kids. Or, they may even buy a new life insurance policy and name the charity directly as a beneficiary. There’s also a very helpful kind of trust called an ILIT, that significantly increases the impact of life insurance. Without getting too complicated, let me give you the basics.

An ILIT is an irrevocable, non-amendable trust which is both the owner and beneficiary of one or more life insurance policies. Upon the death of the insured, the trustee invests the insurance proceeds and administers the trust for one or more beneficiaries.

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What is the Role of an Estate Planner?

When it comes to estate planning, you’re thinking about so many different variables and scenarios, so what if you forget to factor in charity? Lucky for you, that’s why I’m here—to help you maximize charitable giving. That means determining how your generosity can not only help an organization make a difference, but how you can maximize the financial and estate-related benefits from giving.

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What One Recent Study Showed

A 2013 study* showed how lawyers, like me, can help charitable giving factor in estate planning. The scientifically-conducted research from the UK-based Behavioural Insights Team showed that when lawyers asked clients specific questions regarding charitable giving, the results were significant. Here are the results:

  • Control Group/Baseline

Lawyers who provided no reminder or inquiry to their clients about possibly benefiting a charity in their estate plan (bequests) resulted in 4.9 percent of those clients including a charity in their plans.

  • Test Group One

Lawyers who asked their clients, “Would you like to leave any money to a charity in your will?” resulted in 10.8 percent of their clients including a charity.

  • Test Group Two

Lawyers who said, “Many of our clients like to leave money to a charity in their will. Are there causes you are passionate about?” resulted in 15.4 percent of their clients including a charity. What a dramatic increase!

Here are the approximate dollar values associated with each group:

  • Control Group/Baseline

Average bequest $5,000

  • Test Group One

Average bequest $4,800

  • Test Group Two

Average bequest $10,200

Again, test group two gives a powerful example of the difference charity-minded estate planners can make.

In the study there were a 1,000 people in each of the groups. That means that the “Test Group Two” raised over $1 million more than the control group.

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What this means for you is that your lawyer plays an important role in reminding, guiding, and assisting you in your charitable giving so that you can use your super power (giving through your will) to the fullest extent.

In 2014, $28.3 billion was contributed to charities through bequests in the United States. Imagine if everyone worked with a lawyer with a strong focus on charitable giving? The impact could be incredibly transformative for the nonprofit work in our communities.

Let’s Get Started

Harness your super powers and get started with your legacy today. The best place to start is by filling out my Estate Plan Questionnaire. It’s easy, free, and there’s no obligation. It’s simply a document that gets you thinking and planning. Already have an estate plan, but want to update it to include the causes that are near and dear to your heart? Don’t hesitate to contact me.

*I’d like to sincerely thank Rob Hilbert, of the Iowa Public Television Foundation, for bringing this study to my attention. I’d also like to thank Rob for being such a strong and powerful leader in the philanthropic community.

retirement-benefit-plans

Much of Iowans’ wealth can be found in retirement benefit accounts, like IRAs, 401(k)s, 403(b)s, and so on. Funds from retirement benefit plans can be easy and tax-savvy ways for you to support your favorite causes and organizations!

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IRA Charitable Rollover

Much attention in this area has focused on the federal law, the IRA Charitable Rollover. After years of being temporary, the law was finally made permanent. I write all about the IRA Charitable Rollover in this blog post, and I even have a short video explaining it.

But, the IRA Charitable Rollover has strict limitations. Specifically, the IRA Charitable Rollover has two mandatory requirements. First, the donor must be over age 70½.  Second, the retirement benefit plan must be an IRA.

What about younger donors, or people who have different, unique, kind of retirement benefit plans? There are at least three good alternatives to consider.1040 dollars

Required Minimum Distributions

Generally, an account holder must start taking Required Minimum Distributions (RMDs) after age 70½. And, sometimes, much younger folks must take RMDs when they inherit a retirement benefit account. If you’re already having to take RMDs, why not use those funds to support your favorite charity?

There is a (pretty severe) tax penalty if you withdraw funds from a retirement benefit plan too early. But, generally speaking, individuals over 59½ years of age may withdraw funds from retirement plans without any penalty. So, in such cases, a donor can withdraw funds, make a gift with these funds, and then claim an offsetting federal income tax charitable deduction. In the clear majority of such cases, I’m betting a charitable gift made in this manner would at the least be tax neutral for you, the donor.

Beneficiary Designations

No matter what age, no matter what type of retirement benefit plan, there is a very easy way for you to help your favorite charity. Simply name the charity as the beneficiary!

Chicken with eggs- beneficiaries

It’s been my experience that many folks don’t consider or realize they can make a meaningful gift by naming a nonprofit as beneficiary of IRA, 401(k), 403(b), or another plan. This is simple and does not require drafting a will or testamentary trust. (It is true that if the account holder is married, the spouse should be informed and may have to consent to gift).

Keep Current

This is a good time for a  reminder to check your beneficiary designations not only on your retirement benefit plan, but on all such accounts or funds. Savings accounts, checking accounts, mutual funds, stock portfolios, annuity contracts—all these have beneficiary designations (also sometimes called “payable on death” or “transfer on death”). Are your beneficiary designations current? Or is there an ex-spouse still named as beneficiary on your IRA? Make sure to keep your beneficiary designations current, and while doing so, consider naming our favorite nonprofits as beneficiary. Your gift could make a tremendous difference.

Contact Me

Of course there’s always much more to be discussed when it comes to charitable giving. I would love to discuss your ideas and options. Don’t hesitate to contact me by phone at 515-371-6077, or email, Gordon@gordonfischerlawfirm.com.