One of my recent posts discussed supporting your values in the way you leave your money to your children. Supporting your values in your estate plan may include a specific gift to a charity. Overall, Americans gave $316.23 billion to charity in 2012. When you plan to give here are some tips on giving for good and giving wisely.
Give for the Good
Including one or more of the causes and charities you support right now in your estate plan can be a very rewarding experience. Giving by bequest in 2012 was more than all corporate donations. Larger donations, such as you may be able to make in your estate plan can enable a charity to build capital improvements, magnifying their reach and impact.
When selecting a charity to support, take the time to check out some key things: for example, whether they are actually a 501(c)(3) organization (the IRS Code that describes a non-profit),how much of your donation goes to overhead, and how effective are they in meeting their stated goals? Groups like CharityNavigator.org and CharityWatch.org provide recognized ratings for nonprofit organizations. They also have a lot of information and tips on giving wisely here and here.
Plan to Give
If you don’t plan it, it won’t happen, or at least so I’ve been told. There is no doubt that it is true when it comes to leaving gifts to charity in your estate plan – if you don’t spell out your intent to leave a gift to a charity, it won’t happen. For the very well to do there can also be tax benefits to including charities in their estate plan.
When including a charity in your estate plan consider these things: 1) estate plan liquidity, 2) if giving something other than cash, consider whether the charity can actually use or desires it, and 3) how much flexibility your successor trustee should have.
Liquidity: It can be very difficult to administer an estate with no liquid assets. If you designate a certain amount or a particular account you can leave your successor trustee with a difficult job. Consider using a percentage instead, or consider designating an account that will give the charity the cash, and not give the successor trustee a headache.
Leaving an Asset: There is a famous case of a person leaving a well known painting to an art museum. The only problem was that the art piece did not fit with the intent and purpose of the museum, leaving them with something they couldn’t use. Make sure the charity can actually use what you are leaving to them.
Flexibility: What if the charity changes its purpose, or changes the way it operates, or even closes its doors? Ideally, you should be reviewing your estte plan, and re-direct those funds to a charity that reflects your intended giving. Failing that, consider how much flexibility your successor trustee should have in carrying out your wishes.
Are there causes that are important to you? Have you considered including them in your estate plan?