If you are like most people, you are charitably minded. Studies show that more than 80 percent of Michigan residents give annually to nonprofit charitable organizations.
However, have you ever thought about what happens to those nonprofits 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.
In these challenging economic times, governmental grants to and contracts with nonprofits and community organizations have been severely cut. These groups 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.
Although more than 80% of Michiganders are charitably minded during their lifetimes, less than 9% include charities in in their wills or other estate plans. During the first several decades of this century, an estimated 11 to 12 trillion dollars will be passed from the World War II and early baby-boom generations to their descendants. Imagine the benefits to charities if that 9% doubled, or went even higher.
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 get a current income tax deduction, or after you are gone, your estate or trust may get a deduction.
One organization, Leave A Legacy® is a national group of professional advisors and nonprofit groups, including social service and arts organizations, churches, hospitals and educational institutions who encourage charitable giving. Leave A Legacy does not solicit gifts for any particular organization. The partners help promote the message that people from all walks of life can “make a difference in the lives that follow” through charitable giving.
Locally, this group works through Leave A Legacy Southeast Michigan, which provides charitable giving information and speakers to residents and community groups. There are unlimited types of vehicles for planning charitable gifts. Leave A Legacy Southeast Michigan lists their top ten.
1. Retirement Plan Beneficiary. If you have a favorite charity, you can remember them by naming the charity as a beneficiary of your IRA, pension or other retirement plan.
2. Existing Life Insurance Policy Beneficiary. Similarly, there may be that life insurance policy you’ve had for years. You may even have forgotten about it because it is fully paid up. By changing the beneficiary to a charity, you can help that charity after you are gone.
3. Memorial Gifts. After a death, it is common to honor the deceased with flowers to the family. The flowers are usually beautiful, but often are short lived. In addition or instead, you can remember your deceased loved ones by making a memorial gift in their name to a favorite charity.
4. Prepare a will. The latest statistics show that only 43% of Michigan residents have prepared a will. Without a will that you have signed, you lose control of your financial or other assets that have taken you a lifetime to acquire. If you have not prepared and signed will, you still have one. You just didn’t write it. The Michigan Legislature in Lansing did. Wouldn’t you want to be making those decisions about your stuff after you are gone, rather than leaving it up to the folks in Lansing?
5. Name a charity in your estate plan. Just think about the positive impact on our communities if everyone left a bequest to a charity. Even small gifts can make a difference. Many charities survive because of the generosity of small gift donors. You can leave a specific dollar amount or percentage of your assets to your favorite charity or charities in your will or other estate plan.
6. Remember a charity which made a difference to you. You or a loved one may have been helped out by a charity, such as treatment after an accident or assistance after you lost your job. By naming this charity in your will, you can help them help others in similar situations.
7. Encourage others to give. Not only should you remember charities in your will or estate plan, encourage family and friends to do the same. Increase the impact of charitable giving.
8. Use specific assets as gifts. Do you have that extra CD, stock or bond? Or what about the real estate, vehicle , art or jewelry? Leaving specific assets to charities not only will help out the charities, but also may provide income or estate tax benefit to you and your loved ones.
9. Purchase a life insurance policy. If you are still insurable, consider purchasing a life insurance policy and naming your favorite charity as the beneficiary. You can then leverage the premium payments into a much larger gift with a greater impact.
10. Encourage advisors to remember charities. Ask you financial or other professional advisors to include charitable gift planning in their counsel to other clients. This gets the word out to even more people.
It is very simple to leave your legacy. Talk to your favorite charities. The administrators or development officers can give you information about how you can remember them. Speak to your professional advisors. Your attorney, accountant, life insurance agent or financial advisor can also assist you in planning for your charitable gifts.
You can get more information by contacting Leave A Legacy Southeast Michigan at 888-826-7900 or www.leavealegacysoutheastmichigan.org. You can also reach national Leave A Legacy at www.leavealegacy.org. You can make a difference in the lives that follow.
By: Matthew M. Wallace CPA, JD
Published edited September 7, 2014 in The Times Herald newspaper, Port Huron, Michigan as: Make sure your gifts continue after you’re gone