Planning Your Giving Checklist

Understanding Planned Giving: What It Is and Why It Matters

Planned giving, also known as legacy giving, is a type of charitable giving that allows you to make a significant contribution to one or more organizations, often as part of your overall estate plan. Unlike immediate gifts, planned gifts are typically made from assets in your estate, rather than from current income.

There are many reasons why people choose to include planned giving in their financial and estate plans:

• It allows you to make a more substantial gift than you might be able to during your lifetime.
• It can help ensure that your philanthropic goals and values live on after you.
• Certain types of planned gifts can provide tax benefits for your estate and heirs.
• It's a way to show gratitude for organizations that have been meaningful in your life.

While planned giving can seem complex, breaking it down into a step-by-step process can make it more manageable. The key is to start early, think strategically, and involve the right professionals to guide you.

Aligning Your Giving with Your Financial Goals and Values

Before diving into the specifics of planned giving vehicles, it's important to step back and consider your overall financial picture and philanthropic goals. Some key questions to ask yourself include:

• What are my core values and the causes I care most about?
• Which organizations have been most impactful in my life and my community?
• What are my long-term financial goals for myself and my family?
• How much can I realistically afford to give, now and in the future?

It can be helpful to discuss these questions with your family and any financial advisors, to ensure everyone is on the same page. You may also want to create a mission statement for your giving, articulating your key priorities and goals.

Once you have this big-picture perspective, you can start to look at specific giving strategies that align with your objectives. For example, if passing assets to heirs is a top priority, you may want to explore planned giving options that also provide inheritance benefits. If maximizing current tax deductions is important, you might focus on gifts that qualify for that.

The key is to approach planned giving holistically, as part of your overall financial and estate plan.

Types of Assets to Consider for Planned Giving

One of the unique aspects of planned giving is the wide range of assets that can be used to make charitable gifts. While cash is always an option, planned giving often involves non-cash assets such as:

• Appreciated securities like stocks or mutual funds
• Real estate
• Life insurance policies
• Retirement plan assets
• Business interests
• Tangible personal property like art or jewelry

Each type of asset has its own considerations and potential benefits. For example, donating appreciated securities allows you to avoid capital gains taxes on the appreciation, while still claiming a deduction for the full fair market value. Gifting real estate before death can remove a highly-valued asset from your taxable estate.

As you inventory what you own, consider which assets might be the most tax-advantageous to gift. Also think about which assets you want to pass to heirs, as some are better suited for inheritance than others.

If you have complex or unique assets like closely-held business interests or mineral rights, you'll definitely want to consult with professionals on the most appropriate and impactful way to incorporate them into your charitable plans.

Maximizing the Tax Benefits of Your Charitable Contributions

One of the main drivers for many people to engage in planned giving is the potential for tax benefits. While tax considerations should never be the sole reason for giving, maximizing the tax efficiency of your gifts is a smart strategy.

Some of the key tax benefits to be aware of include:

• Income tax deductions for lifetime charitable gifts, up to certain limits based on your adjusted gross income.
• Reduction in capital gains taxes when donating appreciated assets directly, rather than selling them and donating the proceeds.
• Estate tax savings when removing assets from your taxable estate through planned gifts.
• Potential avoidance of income tax on IRA assets by directing qualified charitable distributions.

The exact tax implications will depend on your individual situation and the specific giving vehicles used. For example, charitable remainder trusts and charitable gift annuities can provide a stream of income back to you or other beneficiaries, with varying tax treatments.

Because the tax landscape can be complex, it's important to consult with a tax professional who understands charitable giving. They can help you model out different scenarios and optimize your giving for maximum impact and tax efficiency.

Just remember, while the tax benefits can be significant, they should be the icing on the cake of a giving plan that matches your philanthropic goals.

Selecting the Right Charitable Organizations to Support

With millions of nonprofit organizations across the country, how do you decide which ones to include in your planned giving strategy? While the choice is highly personal, here are some factors to consider:

• Alignment with your values: Look for organizations whose mission and work resonate with the causes you care about most.
• Demonstrated impact: Research the organization's track record and how effectively they're delivering on their mission.
• Financial health: Review financial statements and ratings from watchdog groups to ensure the organization is stable and using funds responsibly.
• Capability to handle planned gifts: Not all organizations have the infrastructure to process complex planned gifts, so check on their policies and resources.
• Personal connection: Often the most meaningful gifts are to organizations where you have a personal history or emotional connection.

Many people choose to concentrate their giving on a few key organizations, while others prefer to spread support more widely. There's no right or wrong approach, as long as you're confident in the organizations you select.

Don't be afraid to have conversations with development staff at target organizations. They can provide more insight into their planned giving options and how your gift would be used to further their mission.

Assembling Your Planned Giving Team: Key Advisors to Consult

Planned giving can involve complex legal, financial, and tax considerations. To ensure your giving plan is effective and properly implemented, it's important to consult with a team of professional advisors. Your planned giving team may include:

• Financial planner: To help you assess how planned gifts fit into your overall financial strategy and goals.
• Accountant: For guidance on the tax implications of various giving vehicles and assets.
• Estate planning attorney: To draft any necessary legal documents, like wills or trusts, and ensure your charitable wishes are legally binding.
• Philanthropic advisor: Some community foundations or financial firms have specialists who can help you develop and implement a philanthropic plan.
• Nonprofit gift officers: Staff at the organizations you want to support can guide you through their specific giving processes and options.

Think of these advisors as your partners in philanthropy. Their expertise can help you navigate the technicalities of planned giving and create a strategy that's optimized for your situation.

When selecting advisors, look for professionals who have experience with charitable planning and who take the time to understand your unique goals. You want a team who can work collaboratively on your behalf.

While you may not need to engage all these experts from the start, it's good to be aware of the types of guidance available as your giving plans progress.

Documenting and Communicating Your Planned Giving Wishes

Once you've determined your planned giving strategy, it's crucial to properly document your intentions and communicate them to the relevant parties. This may involve:

• Updating your will to reflect any bequests to charities.
• Creating trusts or other legal vehicles to facilitate certain types of gifts.
• Changing beneficiary designations on life insurance or retirement plans.
• Executing gift agreements with the receiving organizations.
• Notifying heirs of your plans, especially if your giving will impact their inheritance.

Proper documentation helps ensure there is no confusion or disputes over your charitable intentions after you're gone. Work closely with your estate planning attorney and other advisors to create and maintain clear records of your plans.

It's also a good idea to communicate your plans to the organizations you've selected to support. Many nonprofits have legacy societies or other ways to recognize planned giving donors. By informing them of your intentions, you give the organization a chance to express their gratitude and keep you apprised of their work. These relationships can be very meaningful.

Remember, these documents aren't set in stone. As your life circumstances change, your giving plans may evolve as well. The key is to keep things up to date and ensure all involved parties are informed.

Reviewing and Updating Your Planned Giving Strategy Over Time

Planned giving is not a one-time event, but rather an ongoing process that should be revisited periodically. Life is rarely static - your financial situation, family dynamics, and philanthropic interests may shift over time, and your giving plans should adapt accordingly.

Some key triggers that might prompt a review of your planned giving strategy include:

• Significant changes in your financial situation, such as the sale of a business or receipt of an inheritance
• Major life events like marriage, divorce, or the birth of grandchildren
• Shifts in tax laws that impact the treatment of charitable gifts
• Changes in your philanthropic priorities or the organizations you want to support

Even without major triggers, it's wise to review your plans every few years to ensure they still align with your goals. Your advisors can help you assess whether any updates are needed.

When changes are needed, be sure to update all relevant documents and inform key stakeholders. This might involve revisiting gift agreements with organizations, updating your beneficiary designations, or executing codicils to your will.

Think of your planned giving strategy as a living reflection of your values and legacy. By periodically reviewing and revising your plans, you can ensure your charitable impact remains relevant and impactful over time.

Getting Started: Next Steps for Your Planned Giving Journey

If you've read this far, you're well on your way to understanding the key elements of an effective planned giving strategy. But information is just the first step - now it's time to put these concepts into action. Here are some next steps to consider:

1. Reflect on your values and giving goals. If you haven't already, take some time to clarify what matters most to you and what you hope to achieve with your charitable giving.

2. Inventory your assets. Make a list of all your assets, including any appreciated property or accounts you might not think about regularly. This will help you identify potential giving opportunities.

3. Initiate conversations with loved ones. Share your thoughts on planned giving with your family. These can be sensitive topics, but open communication can prevent misunderstandings down the road.

4. Engage professional advisors. If you don't already have them, start assembling your team of financial, legal, and philanthropic advisors who can guide your planning.

5. Reach out to favorite organizations. Contact the development offices at the nonprofits you're considering supporting to learn more about their planned giving options and processes.

6. Take action on initial steps. Whether it's drafting a bequest in your will or establishing a donor-advised fund, identify some first actions you can take to set your plans in motion.

Remember, you don't have to have everything figured out perfectly from the start. Planned giving is a journey, and your plans will likely evolve over time. The most important thing is to start thinking proactively and take deliberate steps to craft your charitable legacy.

With careful planning and advice from trusted professionals, you can create a planned giving strategy that's meaningful for you and impactful for the causes you hold dear. Your generosity has the power to shape a brighter future - and that's a legacy worth planning for.