Planning for the Future


Spring Cleaning for Estates

Spring cleaning is a concept that might be applied to many aspects of a person’s personal or professional life.  Estate planning, for example, deserves everyone’s attention at least once a year.  Here are some ideas to consider:

Dust off your will — When was the last time you reviewed your will?  Changes in your life may affect your will.  Events that should alert you that your will needs updating include: (1) marriage, (2) divorce, (3) birth of a child or grandchild, (4) death of a spouse or beneficiary, (5) increase in your assets (receipt of an inheritance, for example), (6) relocation to a new state or (7) unavailability of the persons you named as executor or trustee.

Consider the ups and downs of the stock market.  To ensure that your gifts are carried out in accordance with your wishes, it may make sense to leave a percentage of your estate rather than a specific dollar amount.

Straighten up your life insurance — Just as your income, assets and family situation change over the years, so do your life insurance needs.  Do you have too much insurance?  Too little?  Should you buy different kinds of policies?  Buy term insurance?  Convert to annuities?  The specific answers depend on your unique situation.  Don’t neglect your life insurance policies when reviewing your estate.  If you find you have life insurance that you no longer need for family security, consider a gift of the policy to charity.

Take inventory of your financial worth — Although only about .05% of estates will be subject to the federal estate tax (those in excess of $11.2 million in 2018), many may be subject to state estate or inheritance taxes.  You probably own assets that will be subject to income tax in your estate or in the hands of your beneficiaries (U.S. savings bonds, retirement accounts, annuities).  If these assets are left to charity, all income tax can be avoided.

Improve your tax awareness — Tax, estate and financial planning are becoming increasingly complex and demanding.  Familiarize yourself with the relevant issues and concepts.  Sign up for an estate planning seminar.

Plant some seeds to benefit future generations by adding a gift in a will or trust to benefit charity — Remember that gifts from your estate can continue to support the programs to which you contributed during your lifetime.

Endowment: The Gift That Keeps on Giving

Charities and their donors have long been attracted to the concept of endowment, and for good reason.  For supporters, endowment is the gift that keeps on giving — endowment gift principal generally remains untouched and only the income and appreciation are used to support worthwhile programs.  Endowments also create permanence and financial stability for many charities.

Donors can establish endowments through a variety of arrangements, including gifts that occur after one’s lifetime, or that provide donors or others with lifetime income.

  • Your contribution of stocks, bonds or shares in a mutual fund can stand as a memorial or tribute to a loved one.
  • Your estate plan can provide endowment support by a gift through a will, life insurance, revocable living trust designation or a beneficiary designation in your IRA, retirement plan or other financial account.
  • Charitable remainder trusts allow friends to assist both charity and a family member. These trusts are often set up as memorials (The John and Mary Doe Memorial Trust, for example).
  • Charitable gift annuities provide retirees with the security of fixed payments for life that are partly tax free, plus sizable charitable deductions.

Friends who have supported our efforts during their lifetimes often wish to see that support continue.  An endowment allows that to happen.  As the chart shows, a $20,000 gift from an estate can endow an annual $1,000 gift to charity in perpetuity, assuming a 5% return.

Your Bequest Can Memorialize Your Annual Contributions*

If Your Annual Gifts Total:








You Can
Them with a Bequest of at Least:








* A 5% annual return on your bequest, as represented in these tables, would ensure that you can always continue your thoughtful annual contributions.

Timing Can Be Everything in Gift Planning

Savvy charitable gift planning often is a matter of seizing opportunities and acting at just the right time.  We encourage donors to call our office before:

  • Selling investments at a profit
  • Making or amending a will or establishing a living trust
  • Selling a business
  • Selling real estate at a profit
  • Rolling over low-interest CDs or bonds at maturity
  • Making a Roth IRA conversion
  • Naming beneficiaries for retirement plans or life insurance

Tax-saving opportunities are available that can reduce or avoid capital gains taxes, the 3.8% tax on net-investment income or save state and federal estate and income taxes — or possibly all of the above.  Many gift plans can even provide you or a loved one with lifetime income, and tax savings, as well.

Is It Ever Too Late to Write (or Revise) a Will?

All states have minimum ages for executing valid wills, but none has a maximum age.  It can — and does — happen that people have attorneys draft wills right up to the “last minute.”  That’s not always a good idea, however.

First, few people know when their “last minute” is.  It’s far better to take time to think about how assets should be distributed, rather than trying to beat the clock.  While almost any will is better than no will at all, a hastily drafted document may leave out important family, friends or charities that might be included if more time was devoted to its execution.

While there are no upper age limits for wills, all states have rules regarding “testamentary capacity.”  In general, the person signing the will must know that he or she is executing a testamentary document, know the extent of the property they own, intend to benefit those named in the will and must not be under any duress or undue influence.  If a will is challenged, it’s up to the probate court to determine whether the individual was mentally capable of executing a will and whether the document accurately represented the individual’s intent.  A new will that differs vastly from earlier wills may be a sign of undue influence.

Where the estate can demonstrate that the will was executed while the individual was “of sound mind and memory,” that it was reviewed regularly with an attorney and that later wills were consistent with earlier documents, it is less likely that a court would find lack of testamentary capacity or undue influence.  That’s why it’s important to see an attorney early, even knowing that changes will likely be needed in the future.