Estate planning, donor-advised funds, and making your charitable wishes clear
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Hello from [ABC Charity]!
Fall is just around the corner, bringing with it a natural opportunity to think ahead. This month, we're looking at a few ways to ensure the generosity that matters to you today continues to reflect your wishes in the years ahead.
Estate planning: More than just a will
October's National Estate Planning Awareness Week is a good reminder that an estate plan involves much more than a will. If supporting [ABC Charity] is part of the legacy you envision, learn how donor-advised funds, wills, trusts, beneficiary designations, retirement accounts, and other planning tools can work together to carry out your wishes.
Supporting [ABC Charity] from your private foundation turned donor-advised fund
If your family has transitioned—or is considering transitioning—a private foundation to a donor-advised fund, the way you manage your philanthropy may change, but the organizations you care about don't have to. Learn how a donor-advised fund can make it easy to continue supporting [ABC Charity] while reducing many of the administrative responsibilities that came with your private foundation.
Charitable giving: Plan while you can!
Your charitable intentions are yours to define, and documenting them early can make it much easier for your family members and advisors to honor them later. We're sharing practical reasons to talk about your long-term support for [ABC Charity] now—including how early planning can reduce difficult gray areas if health or decision-making capacity changes down the road.
As always, thank you for being part of [ABC Charity]. Your generosity makes our work possible, and we are grateful for your commitment to the people and causes we serve.
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Estate planning: More than just a will
National Estate Planning Awareness Week is coming up from October 19 through 25. This follows August's Make-A-Will Month. A reminder to “make a will” is good advice, of course, but a thoughtful estate plan usually involves much more than a single document. And if supporting [ABC Charity] is important to you, making sure all the pieces work together can be especially important.
Think about the different ways assets can pass at death. Some assets may be distributed under a will or according to the terms of a revocable trust. Other assets—including IRAs, retirement plan accounts, life insurance policies, and certain financial accounts—may pass according to beneficiary designations or “transfer on death” designations.
Creating the legacy you envision requires thinking not only about who and what you want to support, but also about how particular assets will get there. For example, suppose you would like part of your estate eventually to support the work of [ABC Charity]. Depending on your circumstances and goals, you and your estate planning advisors might consider approaches such as:
—Naming [ABC Charity] as beneficiary of your donor-advised fund. If you already have a donor-advised fund, you’ve taken an important step toward organizing your overall giving strategy. Your donor-advised fund provider may allow you to name [ABC Charity] (as well as other nonprofits you care about) to receive all or a percentage of the remaining balance in your fund after your death.
—Leaving a specific dollar amount or percentage through your will or trust. Perhaps you want $25,000, $100,000, or another amount to support [ABC Charity]. Your attorney can incorporate the appropriate language into your estate planning documents. Alternatively, instead of specifying a dollar amount, you might direct that a percentage of your estate pass to [ABC Charity]. A percentage gift can adjust as the value of your estate changes over time.
—Naming [ABC Charity] as beneficiary of an IRA or other retirement account. You can generally designate a charitable beneficiary to receive all or a percentage of your IRA or retirement account, while leaving other assets to family members or other beneficiaries. Traditional retirement accounts are particularly worth discussing with your advisors because distributions that may be taxable to individual beneficiaries can generally be received by a qualified charitable organization without the same income tax burden.
—Considering other beneficiary designations. Depending on the assets you own and your overall estate plan, there may be additional opportunities to name [ABC Charity] as a beneficiary. Your estate planning and financial advisors can help you determine which assets may be most appropriate for charitable giving.
These approaches do not necessarily have to stand alone. The charitable components of your estate plan might incorporate more than one document, beneficiary designation, or asset to accomplish your goals.
For these reasons, National Estate Planning Awareness Week is about more than simply checking “make a will” off your to-do list. It's an opportunity to look at your entire estate plan and ask whether your documents and beneficiary designations work together to reflect the people and organizations you want to support.
If [ABC Charity] has been an important part of your charitable giving, we would be honored to talk with you about ways to make our work part of your legacy, too. We can work alongside your attorney, CPA, and financial advisor as you explore the options that may be right for you.
Changing from a private foundation to a donor-advised fund?
Change happens—all the time—even in charitable giving! Perhaps your family established a private foundation years ago to organize your giving and make a lasting difference. Over the years, your foundation may have supported [ABC Charity] along with many other organizations and causes that matter to you. But families—and charitable giving vehicles—change.
For some families, the administrative responsibilities associated with a private foundation eventually become more than they want to manage. Tax filings, investment oversight, recordkeeping, board responsibilities, and compliance with complex rules can take time and attention away from the reason the foundation existed in the first place: giving to organizations you care about.
That's one reason some families ultimately transition their private foundations to donor-advised funds. The transition generally involves distributing the private foundation's remaining assets to the sponsoring charitable organization after reserving sufficient funds for final expenses and completing the necessary legal and tax work.
If your family has made—or is considering—such a transition, here's something important to remember: Changing how you organize your philanthropy doesn't have to change where you give.
You can continue supporting [ABC Charity].
Once your donor-advised fund is established, you can generally recommend grants to eligible charitable organizations, including organizations your private foundation supported in the past. If [ABC Charity] has been part of your family's giving tradition, your donor-advised fund can make it easy to continue that support.
You may even find that giving becomes easier.
With a donor-advised fund, the sponsoring organization handles many of the administrative responsibilities associated with the fund. That can leave you with more time to focus on the enjoyable part: deciding which organizations and causes you want to support.
Your family can stay involved, too.
Moving away from a private foundation doesn't necessarily mean giving up the family aspect of your philanthropy. Depending on the policies of the organization sponsoring your donor-advised fund, you may be able to involve children or other family members in recommending grants and eventually name successor advisors.
That creates an opportunity to talk with younger generations about why certain organizations have mattered to your family.
If [ABC Charity] has been one of them, tell your family why.
Perhaps you've supported [ABC Charity] for decades. Maybe you became involved because of a personal experience. Perhaps someone in your family benefited from our work. Or maybe you simply believe deeply in our mission.
Sharing that story can be just as important as making the grant itself. It gives the next generation context for your generosity and may inspire them to continue supporting the organizations that have been meaningful to you.
And please let us know about your donor-advised fund.
Sometimes a donor-advised fund grant arrives with limited information about the person who recommended it. If you support [ABC Charity] through a donor-advised fund, we'd love to know that the gift came from you so we can thank you properly and keep you connected with the impact of your generosity.
Most importantly, remember that your giving vehicle is simply that—a vehicle. Whether your generosity comes from a private foundation, a donor-advised fund, a checkbook, an IRA, or your estate, what matters to us is the commitment behind it.
If your family has supported [ABC Charity] through a private foundation and is now giving through a donor-advised fund, we hope you'll keep us in the loop on your charitable journey.
Charitable giving: Plan while you can!
Let's face it—aging is inevitable. Whether you are 20, 40, 60, or 80, the reality is that every day you are getting older!
Against this backdrop, many families have conversations about wills, trusts, financial accounts, health care wishes, and other aspects of planning for the future. Charitable intentions deserve a place in those conversations, too, and unfortunately, in many cases, charitable intentions are overlooked.
No matter how old you are, it's wise to consider your long-term charitable giving plans. Perhaps you've supported [ABC Charity] for decades and want that support to continue. Maybe our mission reflects something deeply important to you or your family. Or perhaps you'd simply like [ABC Charity] to remain part of your charitable giving for years to come.
Talking about those wishes now—and putting an appropriate structure around them—can reduce uncertainty later. Here are a few reasons to do so.
Reduce the gray areas in the event of future cognitive decline.
Planning ahead becomes particularly important as we age. Over time, health circumstances can change, and some people experience changes in memory or decision-making capacity. Families may also find themselves taking a greater role in helping manage a loved one's financial affairs. That can create difficult gray areas when charitable intentions aren't clearly discussed or documented.
Imagine, for example, that a parent has supported [ABC Charity] for 30 years and wants to make a significant gift later in life. Is the gift consistent with a long-standing charitable intention? Do family members understand why [ABC Charity] is so important? If questions about capacity or outside influence have also emerged, even a perfectly legitimate charitable gift can become complicated.
Provide valuable context that will be essential later.
A documented charitable plan can help family members and advisors understand not only where you want charitable dollars to go, but why.
If supporting [ABC Charity] is important to you, tell the people you trust. Explain what drew you to our mission, why you've continued to give, and whether you hope that support will continue during your lifetime, through your estate, or both.
Depending on your goals, you might also include charitable provisions in your estate plan, name [ABC Charity] as a beneficiary of a retirement account or other asset, or involve family members in your giving while you can experience that philanthropy together.
Leave room for changes.
Planning ahead does not mean locking yourself into charitable decisions you can never change. Your interests may evolve. Organizations change. Your financial circumstances may change, too. Instead, the goal is clarity.
By discussing your charitable intentions while you can fully participate in the conversation, you create a foundation that you, your family, and your advisors can build upon. You can revisit the plan as circumstances change and make adjustments when appropriate.
Plan early to avoid sticky situations in the first place.
In some cases, financial institutions and professional advisors must follow certain procedures when questions arise about unusual transactions, diminished capacity, or possible financial exploitation. But even though there are important safeguards designed to protect older adults, it's much better to plan ahead and reduce the likelihood that your family will need to navigate those issues in the first place.
Ideally, your family won't be trying to determine your charitable intentions for the first time after questions about your capacity have arisen. One of the most valuable things you can do is start the conversation early.
And if [ABC Charity] is part of those intentions, please talk with us.
Planning ahead cannot eliminate every question the future may bring. But it can reduce the gray areas—and give the people you trust a much clearer roadmap for honoring the charitable intentions that matter to you.
We would be honored to learn more about what our organization has meant to you, how you'd like your support to continue, and whether we can help you and your advisors document your charitable wishes.
[ABC Charity] is honored to be part of your charitable giving. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Please consult your tax, legal, and financial advisors to learn how this information might apply to your own situation.