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Planning to Give Wisely – Part 2 of 3

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Susan Behlke Foley

In Part 1 of this series about planned giving, I asked you to consider who should benefit from your generosity. This post builds on that one. Today, we’ll discuss the “what?” and “why?” questions related to planned giving.

What should your favored organization(s) receive? How you answer this question can impact the value your family receives as well as the amount going to charity.

There are many tax-favored ways to make gifts to charitable organizations. Your estate planning attorney can help you reduce the estate tax payable at your death. That tax bill will only be reduced if there is a tax bill, though. Most people’s estates won’t be subject to estate tax, which kicks in at $5.43 million in 2015.

IRA’s, 401(k) and 403(b) plans, and other retirement plans are impacted by another tax, the income tax. Think of retirement assets as low cost ways to give to charity. Charities do not pay income tax on amounts they receive from these accounts. Individual beneficiaries do. This leverages the impact of retirement accounts that go to charity. Your financial advisor is a great resource to help you puzzle through this issue.

Now for some fun. Why is the next question to consider as you think about planned giving. Why do you want XYZ Organization to have this gift? What good do you want do? Look at the organization. Talk with a planned giving or development officer, or another employee. Don’t be shy about asking questions. The answers will help you determine whether their goals match yours.

Be particular, but not persnickety. The organization must honor your wishes later, often after you die. If you attach too many strings, you make the job more difficult. For instance, saying your gift should be used to purchase instructional video tapes might have been a good idea a decade or two ago. Now, not so much! Take care picking the organization and give them a task they can excel at. You can also let the organization determine how to use your gift.

Next time, we’ll talk about the “when?” and “where?” questions of planned giving.

Susan Behlke Foley
Foley, Foley & Pearson, P.C.

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