Charitable giving is an important part of any estate planning conversation. Certainly, legacy-making plans are frequently in the news because of the high-profile people who establish them. Your clients may not realize that they, too, and nearly anyone, really, can leave a legacy to support their favorite charitable causes.
By discussing what legacy charitable gifts are, how they work, and then formalizing your clients’ plans with the proper documentation, you can help your clients tie up a few of “life’s loose ends” far in advance of when that legacy gift is actually made—and give your clients peace of mind knowing it will actually get done.
Clients’ charitable giving intentions and the possibility of establishing legacy gifts should be a routine and standard topic of any financial or estate planning discussion, right alongside provisions in an estate plan for family and loved ones.
Here’s a primer to help you simplify key principles when you discuss legacy giving with your clients:
What is a legacy gift?
Encourage your clients to think of leaving a charitable legacy as a post-life gift that the client structures in advance. Legacy gifts are often referred to as planned giving.
What assets can be used to make a legacy gift?
Like the gifts to nonprofit organizations that your clients are already making during their lifetimes, cash, stock, real estate, life insurance, an IRA beneficiary designation (which is extremely tax effective) are all examples of assets that can be used to make a legacy gift. The donation can be expressed in a client’s estate planning documents as a dollar amount, percentage of the whole, or a gift of the assets themselves. Your client will want to choose assets carefully, enlisting your expertise to do so.
How is a legacy gift actually made?
To advisors, this is common sense. But do not overestimate your clients’ understanding about estate plans and how they work. A surprising two out of three Americans have no estate planning documents!
How can a discussion about legacy gifts help motivate clients?
Estate planning can be an uncomfortable topic because, by definition, it requires a client to contemplate mortality. This is likely part of the reason that 40% of Americans say they won’t even consider putting a will in place unless or until their life is in danger. Most clients think charitable giving, though, is a much more pleasant topic than discussing the end of their own lives. That’s why legacy giving is a topic that can help break the ice and pave the way for the broader, essential conversation about overall estate planning.
What are some particulars to be aware of?
Most legacy gifts can be revoked or altered while the client is alive. This is an important feature to mention to clients who want to include charitable giving in their estate plans but like the idea of flexibility as the overall family and financial picture changes over the years.
What tools can a community foundation offer to help?
A particularly useful technique for legacy giving is to have your clients establish a fund at a community foundation that spells out their wishes for charitable distributions upon death to specific organizations. The client’s estate planning documents can, in turn, simply name the fund at the community foundation as the beneficiary of charitable bequests. The client can adjust the terms of the fund anytime during their lifetime to reflect evolving charitable priorities.
Catherine French McGill, JD, CAP®, AEP® is the gift acceptance manager at the Omaha Community Foundation. To learn how the Omaha Community Foundation can partner with you to help your clients with their legacy planning, call (402) 342-3458 or email giving@omahafoundation.org.
