Nebraska is in the early stages of the biggest transfer of wealth in the state’s history. According to recent estimates, more than $100 billion in wealth in Nebraska will be transferred from one generation to the next by 2030. That number jumps to almost $1 trillion within 50 years. Many of these transfers will include charitable donations. Are your clients and their families prepared for this transition?

The Omaha Community Foundation makes it simple to plan for future charitable impact and to establish generational giving. Encouraging clients to have these conversations across generations not only informs families about future financial plans, but also allows them to feel included and excited about the plan, giving them a sense of ownership in family philanthropy.

Have a Family Conversation

In a 2022 study of high-net-worth families, 81% said family meetings and regular communication are the most-effective wealth transfer planning strategy.

Advisors can prompt their clients to include their children or future generations in their charitable giving conversations “by helping clients understand that philanthropy and charitable giving is not only about giving away money,” said Ralph Dovali, CPA and partner at McMillen Dovali Co. “When people live a philanthropic life, it is easy to pass those values down, starting at an early age.”

If you have a client interested in charitable giving, you can help the discussion get more specific by asking:

• Is there a determined percentage of wealth that will go to supporting family values?
• How much do children want to be involved in giving?
• How will this look after the parents have passed?
• How can these plans be carried out in the most tax-efficient manner?

Leading this conversation can bring clarity for your clients, so no surprises occur when the time comes to pass along family wealth. It can also serve as a way for advisors to maintain a relationship with the next generation. Two-thirds of children leave their parents’ financial advisor after they inherit their parents’ wealth, according to a 2021 national study. Starting the conversation early with parents and children about intergenerational wealth is key for a family’s legacy and for your ongoing relationships with the next generation.

Your clients’ children may be unaware of all the complex incentives available and how the structure of benefits changes. Clearly defining the advantages of strategic gifting, legacy giving, and family involvement in philanthropy should be ongoing.

Choose a Community Foundation

When your clients are ready to establish their legacy giving, partnering with the Omaha Community Foundation (OCF) can make your job easier because of our philanthropic expertise and deep knowledge of local needs and the nonprofit organizations working on solutions in our community. 

Children can be added to their parents’ funds at the Foundation, allowing them to begin making charitable giving choices with their parents. Parents can also name their children as the funds’ successors, allowing them to manage grantmaking for years or generations to come.

“My clients have set up and utilized a donor advised fund (DAF) at OCF as a key tool in their charitable giving,” Dovali said. “They love the flexibility of giving on a timeline best suited for them and the end-charity while still controlling when they experience the tax benefits afforded by donating to the DAF.”

People can fund their legacy giving in a number of ways that have tax advantages:

• Wills or Trusts – Name a fund at the Omaha Community Foundation in a will or trust and work with us to craft the legacy. Your client’s estate qualifies for a charitable deduction for the full donation. OCF can provide a template for bequest language.
• Legacy Donor Advised Fund – Create a fund where the next generation can advise on grant making to nonprofit organizations without the added expenses and administrative burdens.
• Legacy Designated Fund – Create a fund where you define the longevity of the fund, structure of grant amounts, and preferences for grant designations, then our team will carry out these directives. 
• Life Insurance Beneficiary Designation – Name a fund at the Foundation as the beneficiary of a life insurance policy or donate an existing policy. If your client purchases a new policy, they can name the Foundation as the owner. The premiums will be paid annually by their contributions to the Foundation, which are eligible for a tax deduction.
• IRA Beneficiary Designation – Name a fund at the Foundation as a primary or contingent beneficiary of all or a portion of an individual retirement account. Funds flowing directly to a fund at OCF from a retirement plan after the person’s death will not be subject to income tax or estate tax.

Leaving a Lasting Legacy

Lawrence “Red” Thomas helped build ConAgra into one of the world’s biggest food companies and one of Omaha’s most significant employers. He retired after 36 years. He and his wife Jan spent time determining their community impact.
The Thomases set out to construct their legacy plan with the help of the Omaha Community Foundation. It’s a plan that will extend their giving intent and ensure their philanthropic priorities will be honored after they are gone. The plan also depends on the insight and knowledge the Omaha Community Foundation provides when it comes to identifying the current and future needs of the community.

Thomas said that even after a lifetime of community involvement, they still can’t know where the future needs will be and who will be most in need of help. But building a plan with OCF alleviates some of those concerns.

“OCF has provided such great flexibility for constructing a legacy plan, and they try hard to make your ideas turn into reality and extend your charitable life,” Thomas said. “That is a legacy.”