Using philanthropy as an estate-planning tool

When I mention the words "philanthropy" or "estate planning," I worry that I have already lost the conversation, so I am more apt to ask people who are charitably inclined whether they would like to give more without it costing them more, or if they would like to be sure that their gifts are making the impact they desire. I usually get a better reaction. Either way the methods are somewhat the same.

But in my experiences people don't give to save money, and they certainly don't want to spend a lot of time or money in meetings talking about trusts and bequests. People give because they want to see something good happen with their money. Whether they want to help people or animals or a particular community or school, they want to know that they did the right thing, and the way they know is how they feel a day, a year, or a decade later. Good planning doesn't have to be painful, but it can be extremely effective not just in increasing current tax breaks, increasing disposable income, and providing security for the family, but also in knowing that the charitable giving portion of the plan is money well spent.

The benefits to looking at your charitable giving as part of your financial and/or estate plan really begin when you are in the middle of your career. The time to consider your first bequest is when you are drafting your first will or trust. Even then there are assets that will receive beneficial tax treatment if you designate them to charity, such as an IRA. Other assets such as real property and non tax-sheltered investments will receive a step-up in basis when distributed to your heirs. The use of a donor-advised fund can provide greater tax deductions as well as avoidance of taxes such as capital gains, and you can time your giving better for grouping deductions in years with high income and/or for maximizing itemized deductions.

A terrific time to look at philanthropy as part of your estate planning is when you receive an inheritance, sell a business, or retire. The best conversations happen just prior to these taking place, but many beneficial plans can also be made later, including incorporating charitable giving to receive increased annual income and current tax breaks. The use of a charitable gift annuity or charitable remainder trust can provide these benefits as well as providing security to the family in the form of an income stream or current discount of a future bequest to children or grandchildren. The use of a current charitable gift combined with a life insurance policy or family wealth replacement is a technique frequently used.

Many people I speak with think they don't give enough to take advantage of these techniques, but you don't have to make significant annual gifts to realize great benefit, and many of the people I speak with can't afford to give much now but plan to make very generous gifts through their estates. I remember two specific cases where people wanted to set up bequests, one to support the university and one for local youth organizations. We spoke over a year or two but neither person was in a hurry and unfortunately time caught up with one and the other suddenly passed away. I regret that we hadn't put pen to paper to catch their plans, which actually would have been very simple codicils to their existing wills.

The best time to bring up the thought of incorporating financial and estate planning is when you are meeting with your advisor. Your financial advisory, accountant, or attorney should be able to help and letting them know you would like to discuss charitable giving as part of your plans lets them know they can suggest some terrific ideas to you that they may not have previously introduced. Many of the charities in northern Nevada have banded together to provide a program to the public called "It's Your Estate." This program provides a series of excellent financial and estate planning classes to the public for free, taught by professionals who volunteer to help spread the word about good planning. This program is underwritten by KNPB and the Community Foundation of Western Nevada with the next series of classes starting at the end of the summer.

Remember, you don't need to be rich to give, and you don't need to make huge gifts in order to take advantage of these giving techniques. And as one who has been closely involved with charities for decades, I promise you that your gifts are needed and do make a difference.

Chris Askin is president and chief executive officer of the Community Foundation of Western Nevada. Contact him at 775-333-5499 or through www.cfwnv.org.