August is National Make-A-Will Month, which means your clients may be reading articles and hearing about estate planning more this month than usual. This makes the next few weeks an especially good time to prompt your clients to review their estate plans or get their wills and trusts if needed.
Charitable giving is an essential part of any estate planning conversation. Certainly, bold, legacy-making plans are frequently in the news because of the high-profile figures who establish them. Your clients may not realize that anyone can leave a legacy to support their favorite charitable causes, not just high-profile figures.
By defining for your clients what legacy charitable gifts are and how they work, you can better assess what they may have in mind before formalizing a plan. With the proper legal and financial documentation, you can help your clients tie up a few of life’s “loose ends” well before any legacy gift is made. Additionally, you can give your client the peace of mind of knowing their plan is in safe hands.
Clients’ charitable giving intentions and the possibility of establishing legacy gifts should be a routine and standard topic of any financial or estate planning discussion, alongside discussions about provisions in estate plans for family members and loved ones.
Here are some questions that may be worth answering for your clients and guiding points to help you simplify key principles as you explain what they need to know about leaving a legacy.
Q: What is a legacy gift to a charity?
We encourage you to help your clients consider leaving a charitable legacy gift as a “post-life” gift established in advance. Legacy gifts are often referred to as planned giving.
Q: What assets can be used to make a legacy gift?
Like the gifts to charity your clients are already making, they can use cash, stock (especially highly appreciated), real estate, life insurance, an IRA beneficiary designation (which is extremely tax effective) and more to create a legacy gift. A legacy gift can be identified in a client’s estate planning documents as a dollar amount, a percentage of the whole or a direct gift of the assets themselves. Your client will want to choose assets carefully, enlisting your expertise to do so.
Q: How is a legacy gift actually made?
Legacy gifts are typically expressed in detail in a client’s will or trust documents. This is especially important because after the client is no longer alive, many details are potentially subject to hearsay or conflict, a fact that many attorneys, accountants and financial advisors are aware of. We caution you not to overestimate your clients’ understanding of estate plans and how they work. A surprising two out of three Americans have no estate planning documents.
Q: How can a discussion about legacy gifts help motivate clients?
Estate planning can be an uncomfortable topic because, by definition, it requires a client to contemplate mortality. This is likely part of the reason that 40% of Americans say they will not even consider putting a will in place unless or until their life is in danger. Conversely, most clients think charitable giving is much more pleasant to discuss. We encourage you to use charitable giving as a vehicle to discuss estate planning.
Q: What are some particulars to be aware of?
Most legacy gifts can be revoked or altered through a beneficiary or if the will changes while the client is still alive. This is an important point to mention to clients who want to include charitable giving in their estate plans but also like the idea of flexibility as the family and financial picture changes over the years.
Q: What helpful tools can KZCF offer?
A particularly useful technique is for a client to establish a fund at KZCF that spells out the client’s wishes for charitable distributions upon death to specific organizations. The client’s estate planning documents can, in turn, name the fund as the beneficiary of charitable bequests. The client can adjust the terms of the fund anytime during their lifetime to reflect evolving charitable priorities.
We look forward to working with you and your charitable clients as they firm up their legacy giving plans!