Did you know that in 2019, Americans gave almost $450 billion to charities? The average high net worth donors gave close to $30,000 while the general population households gave about $2,500. For more details on these statistics, see NPtrust.org.
National Philanthropy Day is a day set aside each year to recognize the great contributions philanthropy makes to our society and to recognize those persons, businesses and organizations that are active in the philanthropic community. This year we celebrated National Philanthropy Day on November 15th.Although, the word philanthropy has connotations of wealth, even those of more modest means can make a difference by donating assets either as a gift during their lifetime or as a bequest upon their death.
The reasons we give vary from our interests in a specific cause to a desire for tax relief. How and when to gift is an issue to discuss with your estate planner and your accountant. Generally, we speak of a gift as something we give while we are living as opposed to a bequest which is a gift from your estate after you have passed away. Specifically, a charitable bequest is a written instruction in your will or trust that directs a gift to be made upon your death to a charity.
You have a variety of options of how to accomplish your bequest depending on your personal goals. Sometimes gifting a specific property or account works well, but other times a percentage of your estate or a specific amount are more appropriate. For example, I recently worked with a man who wanted to give $10,000 to each of his nieces and nephews regardless of the value of his estate, and in that case stating the specific amount was more effective than a percentage of the estate.
On the other hand, I once worked with a woman who firmly believed in tithing 10% of her entire estate to her church. At the time she had a home and about $100,000 so she wanted her will to give her church $10,000 with the remainder to her children. But her home was worth $150,000, so her estate was valued at $250,000 meaning her tithe would be $25,000 not $10,000. If her will specifically bequeathed $25,000 to her church based on these current values, but her estate later changed in value due to investments or medical expenses, that amount may have been incorrect as well. Imagine if she spent most of her savings on health care, her church would have potentially inherited much more than her children, if $25,000 waws much greater than 10% of the value of the remaining estate! In her case, we decided to direct that 10% of her estate would be bequeathed to her church to provide the flexibility she desired.
In some cases, a specific bequest to a specific beneficiary is the best solution. I once worked with a woman who had a beautiful collection of West Virginia artifacts, she did not care what the value of her collection was, she wanted her entire collection to go to a specific museum. She feared that her family may not appreciate the collection, or they might sell it off piecemeal.
Regardless of your charitable goals, there is a reasonable estate planning solution to accomplish those goals. Work with your estate planning attorney to determine the best way to achieve your goals. Remember, it is never too early to plan!