As our Southwest Washington community becomes more affluent, we see more and more families including philanthropy in their financial plans. This is something to be celebrated. It can also be daunting, since there are so many choices in where, and how, to give money.
Below are some of the more common questions I’m asked by families that want to include philanthropy in their family’s commitments and financial plans.
The Giver
Must I be a multi-millionaire to be philanthropic? No. In fact, statistics show that the most generous citizens are those of more modest means. Philanthropy is foremost about values, and creating a legacy that honors those values. Whether your estate is valued at $500,000 or $50,000,000, your most important decision to give is motivated by your own values and belief system.
How do I choose a charity? Many donors choose charities they already know, such as their college, church or synagogue. You may also decide to support a cause that you have cared about during your lifetime. There are also two websites that provide background information on over 1.5 million charities in the United States: www.guidestar.com and www.charitynavigator.org.
Should I inform my children? I recommend informing, and even better – involving – family members. Informing your family gives you the chance to share your personal goals for your philanthropy, and to enlist their participation in helping you carry out your legacy. It may avoid hurt feelings in the future.
The Gift
Are some assets better than others to use? Yes. One of the biggest mistakes we all make is underestimating the value of our assets. A careful plan that accounts for all of your assets can maximize your specific gift to a charity, and can provide your estate the best tax advantage.
Can I still use my IRA assets? Yes, through the end of this calendar year. While we hope Congress will extend the law, the Pension Reform Act of 2006, the provision that allows distributions from your IRA directly to charity as part of your mandatory distributions only lasts until Dec. 31, 2007.
The Plan
Explain my planning options. Your choices are numerous. One choice is to create your own family foundation, which gives you maximum control over all decisions. You may also set up “life income gifts” such as a charitable remainder unitrust, or a charitable gift annuity. These gifts provide you and/or other family members an income stream during your life and at your death the residual goes to the charitable institutions you’ve selected. You may also establish a charitable endowment fund at the Community Foundation
How much should I do myself? At what point do I need professional advisors? Your most important work is evaluating your charitable goals, determining the charities to benefit from your gift, and then writing it down.
You’re now ready to seek help from professional advisors. A team approach works best. The Estate Planning Council of Southwest Washington has more than 60 members who represent the legal, accounting trust, financial and insurance disciplines, knowledgeable in helping you incorporate philanthropy into your estate plan.
A carefully developed philanthropic plan ensures your control over your assets, and provides a continuing gift to your favorite causes into the future.
Nancy Hales is president of the Hales Group Inc., a local consulting firm that helps families manage their private foundations. Prior to that, Hales was president and CEO of the Community Foundation for Southwest Washington. She is the currently the chairman of the Estate Planning Council of Southwest Washington. She serves on several local and state philanthropic boards. She can be reached at 360-904-8349.
