If you are like most people, you are charitably minded. Studies show that more than 80 percent of Michigan residents give annually to non-profit charitable organizations.
However, have you ever thought about what happens to those non-profits after you are no longer around to make those annual gifts. The charity which is close to your heart can no longer rely upon your support.
It is estimated that only 3 percent of Americans and only 2.8 percent of Michigan residents leave bequests to charities upon their deaths. Not only do relatively few people make bequests to charities, the bequests that they do make produce relatively few dollars. One study reports that funds from bequests accounted for less than 7 percent of total giving nationwide.
During the first part of this century, an estimated 11 to 12 trillion dollars will be passed from the World War II generation and early baby boom generations to their descendants. Imagine the benefits to charities if the 3 percent number doubled to 6 percent of American estate plans or went up to 10 percent, which is still a low percentage.
In these challenging economic times, the non-profits and community organizations need help from each of us. I believe it is important to recognize the significance of charitable gift planning and its impact that you can have on the organizations that keep our community moving during times like these.
There are a variety of tools and techniques that you can use to plan your charitable gifts. Because charitable contributions get favorable tax treatment, with these planned charitable gifts you either receive a current income tax deduction, or your estate receives an estate tax deduction.
There are unlimited types of vehicles for planned charitable gifts. One of the simplest is an outright bequest in your will. You can name a charity as beneficiary of all or a portion of a life insurance policy, annuity, individual retirement account, employer retirement plan or other accounts.
With a charitable gift annuity, you make a present contribution to a charity in exchange for a monthly lifetime or a fixed term annuity. Similarly, with a charitable remainder trust, you get a stream of income during your lifetime, and after you are gone, the charity receives the balance of the trust. In a charitable lead trust, the charity receives a stream of income for a period of time after which the entire balance of the trust goes to your beneficiaries.
To determine which charitable vehicle would be right for you, please contact a qualified estate planning professional. By making a planned charitable gift, you can Leave A Legacy® and “Make a Difference in the Lives that Follow.”
By: Matthew M. Wallace, CPA JD
Published edited January 18, 2009 in The Times Herald newspaper, Port Huron, Michigan as: How to plan for charitable donations