018 DGM – Smart and Easy Ways to Leave a Gift to Charity – Part 2

Smart and Easy Ways to Leave a Gift to Charity (part 2)

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Main topic

  • Smart and easy ways to leave a gift to charity (part 2)
    • We’re talking again today about the smart part of Give Smart from Your Heart.
    • It’s about leaving a gift to charity when you die, through your estate.Smart and Easy
    • Individuals gave $22 billion through their estates in 2012, according to Giving USA.
    • When people hear “planned giving” or “estate giving” to charity, they think yikes – complexity – CRTs and other acronyms – lawyers! But leaving a gift to a charity of your choice doesn’t have to be complicated.
    • I’m going to give you general information, not specific advice on individual matters. If you want specific advice on the things I discuss you should should contact a professional advisor experienced in those matters.
    • #1, #2 and #3 — see Part 1
    • #4: Easy-to-set-up tools
      • You have four easy-to-set-up tools for leaving a gift to charity.
        1. Beneficiary naming. Giving an IRA, retirement plan, or deferred annuity to a charity is accomplished by beneficiary naming — you name the charity as a beneficiary (primary or contingent) using the plan provider’s forms.
        2. Transfer on death. Brokerage and mutual fund accounts can be given to a charity using a transfer on death arrangement — similar to naming a beneficiary. Not all brokerage and mutual fund firms provide transfer on death arrangements — check with the firm first.
        3. Pay on death. Bank accounts can be given using a pay on death arrangement — also similar to beneficiary naming. A bank might refer to this as an “in trust for” or “Totten Trust” or “beneficiary” arrangement. Check with the bank’s new accounts specialist.
        4. Will or trust gift. Giving U.S. Savings Bond and most other assets to a charity is accomplished by designating it to received them under a will or trust.
          • Do not make the charity a lifetime co-owner or pay on death beneficiary of U.S. Savings Bonds purchased at a discount.
      • Simplicity evaluation
        • Tools A, B and C above are usually simple and inexpensive to accomplish.
        • For Tool D, use an experienced and capable attorney. If you already have a will or trust, adding the charity can be easy and inexpensive to accomplish. Creating a new well-crafted will or trust typically involves greater time and expense.
    • #5: Putting it all together
      • I put all the parts together with the Smart and Easy Scorecard.
      • Each of the seven approaches in the Scorecard is a smart and easy way to leave a gift to a charity of your choice.
      • The approaches (## 1 to 7) are ranked declining order of combined “smart and easy stars.”
      • Smart and Easy Scorecard
    •  # 



      Super Star Assets
      (avoid income tax)

      Change Your Mind
      During Your Lifetime

      Estate Tax

      Easy to Set Up


      IRAs and Retirement Plans A. Beneficiary Naming


      Deferred Annuities A. Beneficiary Naming


      U.S. Savings Bonds D. Will or Trust Gift



      Life Insurance A. Beneficiary Naming



      Brokerage Accounts and Mutual Funds B. Transfer on Death


      Bank Accounts C. Pay on Death


      Many Other Assets D. Will or Trust Gift


      Reviewing the rankings

      • #1 (naming a charity as beneficiary of your IRA or retirement plan) earns a star in each category for a total of 4 stars. It’s a super star asset, you can change your mind during your lifetime, you get an estate tax deduction, and it’s easy to set up.
      • #2 (naming a charity as beneficiary of your deferred annuity) ties #1 for 4 stars.
      • #3 (U.S. Savings Bonds given through your will or trust) would have earned 4 stars but gets downgraded slightly because the will or trust aspect makes it it bit less easy to set up.
      • ## 4, 5 and 6 each earn 3 stars (but they don’t qualify for the super star asset star).
      • #7 (most other assets through a will and trust) would have earned 3 stars but gets downgraded slightly because the will or trust aspect makes it it bit less easy to set up.
    • #6: How to hire a estate planning attorney
      • Look for the “3 Cs” (capability, cost and compatibility) –
        • Capability — Does the attorney have the training, skills and experience to handle the work?
          • Look for an estate planning or elder law attorney who spends 80% or more of his or her time working on estate planning, administration and related matters.
          • Stay away from the “general practice” attorney (in my view it’s impossible to keep up with multiple areas of the law and do it well).
          • Ask for references to families where the client helped has since died. If the attorney did a good job, things should have run smoothly.
        • Cost – Are the attorney’s charges clear, understood and acceptable to you?
          • It’s O.K. to shop around.
          • For a new or updated estate plan, look for a fixed charge, or a maximum — avoiding hourly fees whenever you can.
          • Be sure to have a written contract for services that spells out your deal with the attorney.
        • Compatibility — Choose one you connect and feel comfortable with, and who listens to you.
          • You need to be able to share private information.
          • There are many attorneys, with different personal styles — with some you’ll be comfortable, with others you won’t.
      • Actually, the “3 Cs” work when dealing with all types of professional advisors (estate planning or otherwise).
    • Your smart and easy assignment for today
      • Think about your existing relationship with your estate planning attorney or another professional advisor. How does it stack up under the 3 Cs?
    • A big part of giving smart from your heart is knowing about the tax and other rules that apply to giving to charity.
  • Had experiences? Have feedback? Share your thoughts  in the Reply / Comment section at the bottom of the page. Or email me at ed[@]seriousgivers.org

Episode sponsor

  • Today’s sponsor is the number 4 014 855 825. 
    • Our sponsors don’t pay us anything. But they give us a way to talk about a different charity-related concept each week. And help us all grow our understanding of nonprofits and charities.
    • $4,014,855,825 is the annual revenues of the nonprofit with the greatest annual revenues as shown by the latest data published by the IRS.
    • Remember, you can quickly check the identity, reported revenues and EIN of every nonprofit registered with the IRS at CharityCheck101.org.

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About Ed Long, the podcaster

Podcaster Ed Long has been preparing more than 40 years to do this podcast. He knows charities and the rules that apply to them. He’s analyzed charity finances and operations.  He’s founded and run charities, and volunteered for them. He’s helped the public and law enforcement fight fake charities, and has served as a philanthropy educator and coach. Before all that he worked as a partner with a major Wall Street law firm. Ed is the founder and CEO of SeriousGivers, which itself is a charity. Ed knows the great work that strong charities can do with the resources entrusted to them, and is passionate about helping others find and support strong charities.