If you have made contributions to a charity or a school, there is a good possibility your name then landed on their mailing list. If so, you also have probably received other solicitations for future donations, including the suggestion of making a bequest for the organization, otherwise known as adding them to your will.
Charitable bequests – sometimes referred to as “legacy gifts” or “planned giving” – are an increasingly popular way for individuals to support their favorite charities and other worthy groups. It makes sense for everybody involved. A person or a couple may wish to make a contribution to a certain organization they like, but at the same time, they prefer not to deplete the funds required for their own needs now and in later years. With the potentially tremendous costs associated with healthcare for seniors, it is understandable to hold onto one’s nest egg as long as possible.
However, by designating charitable recipients in their estate plans, those donors will have the assurance that some of their remaining assets will go directly to the causes they care about – after they no longer need the money for themselves.
Using data from a Health and Retirement Study sponsored by the National Institute of Aging, a 2013 report from Texas Tech University compared the financial goals of older Americans who currently had a will or an estate plan. Their findings revealed that about 10 percent of those elder citizens had designated one or more charities as beneficiaries of their wills or of a funded trust. The study also showed that the number of people who included charitable contributions in their estate plans had been growing steadily since the research began in 1998.
It is important to note that the study group was only senior adults who already had a will or a trust in place. Unfortunately, more than half of all adults in the United States die without having established a proper estate plan.
An estate plan is the formal process of determining and recording a legal strategy which specifies what will happen to your possessions when the inevitable time comes to transfer or disperse them. Your estate plan can designate which family members, friends, or other recipients will inherit your assets and how they will be divided – and that can easily include a charity or a school.
But however you prefer to distribute the items you own, you need to make your decisions known in advance, and legally documented.
A variety of bequest opportunities
There are many ways to arrange legacy gifts as part of your estate planning, and the charitable contribution does not have to be a cash donation taken from your financial assets. For example, your will can specify that a charity or institution be given physical property or real estate, or be named as a beneficiary of your life insurance policy.
There also are several good options for making charitable contributions while you are still alive, such as donating stocks or bonds. If you give a gift of publicly traded stock to a charity, and the stock has appreciated since you bought it, you will avoid paying capital-gains tax on the higher value. You also can claim an income-tax deduction for the current value of the stock.
Why are more people now adding bequests to their estate plans? One theory is that many Baby Boomers never had children, and therefore have fewer inheritors to include in their wills. In a study conducted by the University of Georgia among men and women over the age of 50, roughly half of the participants who were childless reported that they had made provisions for charities to benefit from their estates.
Let a qualified estate planning attorney guide you
It is a very simple step to include a bequest or other legacy gift in your estate plans, but always discuss your intentions with your attorney and financial advisors when creating your will or trust.
If you already have a will, it can be modified with a codicil — a legal amendment that changes only specific sections of the will (such as naming a charity) while leaving most of the document intact.
The experienced elder law attorneys at Cordell Planning Partners provide affordable smart solutions to help seniors with wills, trusts, Power of Attorney documents, and other essential aspects estate planning. We easily can arrange for your chosen charities to benefit from your generosity.
Cordell Planning Partners also offers free educational workshops, where we explain the various asset protection programs, all in terms that are easy to understand.
To learn more, contact us. You can even schedule a free estate plan analysis to discuss your current estate plan and goals.