Legacy Giving: Unlocking Opportunities for Your Clients
July 09, 2024
August is National Make-A-Will Month, a time when your clients may encounter more information about estate planning than usual. This presents an excellent opportunity to encourage them to review their estate plans or establish their wills and trusts if they haven’t done so already.
Charitable giving is an important component of any estate planning discussion. By discussing legacy charitable gifts—what they are, how they work, and what your clients have in mind—you can help them formalize their plans with the necessary legal and financial documentation. This process allows clients to address "life's loose ends" well in advance and ensures their intentions will be fulfilled, providing peace of mind.
Including clients’ charitable giving intentions and the potential for legacy gifts should be a standard part of any financial or estate planning conversation, alongside provisions for family and loved ones.
Here’s a guide to help you convey the key principles of legacy giving to your clients:
Q: What is a legacy gift to a charity?
A: Encourage your clients to view a charitable legacy as a post-life gift structured in advance. Legacy gifts are often referred to as planned giving.
Q: What assets can be used to make a legacy gift?
A: Similar to lifetime charitable donations, assets such as cash, stock (especially highly-appreciated stock), real estate, life insurance, and IRA beneficiary designations (highly tax-effective) can be used for legacy gifts. These gifts can be specified in estate planning documents as a dollar amount, a percentage of the estate, or as specific assets. Your expertise will be essential in helping clients choose the right assets.
Q: How is a legacy gift actually made?
A: Legacy gifts are typically detailed in a client’s will or trust documents. This specificity is vital to avoid potential hearsay or conflict after the client’s passing. While this is common sense to professionals, many clients lack understanding about estate plans. Notably, two out of three Americans have no estate planning documents.
Q: How can a discussion about legacy gifts help motivate clients?
A: Estate planning can be uncomfortable as it involves contemplating mortality, which may explain why 40% of Americans delay creating a will. However, discussing charitable giving can be more pleasant and serve as an icebreaker, paving the way for broader estate planning conversations.
Q: What are some particulars to be aware of?
A: Most legacy gifts can be revoked or altered through changes in beneficiaries or will amendments while the client is alive. This flexibility can be reassuring to clients who want to include charitable giving in their estate plans but anticipate changes in their family or financial circumstances.
Q: What tools does the Community Foundation offer to help?
A: A useful technique is establishing a fund at the Community Foundation that specifies the client’s wishes for charitable distributions upon death. The estate planning documents can then simply name the fund as the beneficiary of charitable bequests. Clients can adjust the fund’s terms anytime during their lifetime to reflect changing charitable priorities.
We look forward to working with you and your charitable clients as they solidify their legacy giving plans, whether in August or any time of the year!
