Estate Planning Increasingly Involves Charity Decisions

How to distribute one’s estate, never an easy decision and one with which people wrestle a great deal, becomes all the more complicated for those who don’t have children, stepchildren, grandchildren or other family members who might otherwise normally be in the mix.

(Photo credit: Tax Credits)

(Photo credit: Tax Credits)

A recent item in The New York Times by Caitlin Kelly May, leaving all or part of an estate to nonprofit organizations is something more and more older Americans are not merely considering but are actually doing.
Even some who do have close relatives but don’t feel they are in need of an inheritance or that some cause or another is the better bet are falling into this category, the article indicated.
“Today, with smaller families and more women choosing not to have children, ‘the dynamic has changed pretty significantly for the generation of baby boomers,’” Bob Carter, chairman of the board of the Association of Fundraising Professionals told May.
“The option of doing something charitably significant with their estates is a change,” he was quoted as saying.
“This situation is more and more prevalent,” said Kevin Pickett, executive director of development at MD Anderson Cancer Center in Houston.“Many people come to us to make a donation as a life stage decision. They’ve had a cancer diagnosis, or a friend or family member has. A retirement, divorce or new job can also prompt people to reflect on their legacy. What are we going to do with all this stuff we’ve accumulated in our lifetime?”
Carter, who has 40 years of experience in philanthropy and fundraising, termed this increased focus on charitable giving as part of estate planning complete shift for today’s long-retired population.
“Our family didn’t think of anything but leaving everything to us,” he told the writer. “The concept of estate planning didn’t exist in my parents’ lives.”
“The decision-making process should begin with some philosophical questions, said Isabel Miranda, a partner in the Bloomfield, N.J., law firm Pearlman and Miranda,” May wrote. “Ms. Miranda, a former bank trust officer, now specializesin helping clients plan their wills, trusts and estates.”
“Who do I owe my success to?” Miranda said. “What values do I want to reflect? How do Iwant to pay back the organizations I believe in?”

Head or heart? Donation decisions can be difficult

When people think about making charitable donations, sometimes they don’t really think at all.
Instead, they give based solely on emotions, which is fine.
A recent blog on the website of The New York Times, however, recognized this distinction was “one of the big debates among donors and their advisers: is it better to give in response to an emotional need or feeling, or are dollars better spent when tied to a metric that measures how effective they are?”
The “Wealth Matters” column by Paul Sullivan dealt primarily with how the author and his wife had fallen into the habit of primarily supporting charities that help blind people, the result of having adopted a retired guide dog.
“We have been emotional givers from the start,” Paul Sullivan wrote. “It always seemed like a pure good to support groups that helped blind people. We’ve never looked at the ratings from Charity Navigator or GuideStar on either group. But we have followed closely what both organizations have done. We may have gotten lucky.”
“The giving with the heart people, they may go wrong in trusting an organization that is not trustworthy,” Gene Tempel, founding dean of Indiana University’s Lilly Family School of Philanthropy, told Sullivan for the blog. “One of the pieces of advice we give to people is get to know the organization. It means walking into the organization and asking questions. It means asking for a copy of an annual report.”
“The whole issue of measuring and metrics and trying to have impact data is, I think, a very contemporary part of philanthropy,” the blog quoted Thomas E. K. Cerruti, former personal lawyer to Sam Skaggs, a billionaire philanthropist who made his fortune in supermarkets and drugstores. “What motivates people to give? For selfish reasons, a name on a building is at the top of the list. But some people want to effectuate something that has some personal interest to them. Other types of motivations are hard to analyze.”
In essence, the article suggests that while the heart might be a good guide in deciding the type of organizations to support, the head might want to play a role in ensuring the donations do some actual good.

Not all want their good works to be known

Some people give to charities simply to get a break on their taxes, while others do the same thing to look good in the eyes of the community.
For many, though, charitable is simply the right thing to do, and not only do they not want recognition for it, but also they want their act to remain hidden from public scrutiny.
More than 90 billionaires in the United States, led by Berkshire Hathaway‘s Warren Buffett and Microsoft co-founder Bill Gates, have gone public with their pledge to give away at least half of their fortunes while still alive or when they die.
But that approach doesn’t suit everyone, according to a recent article in Forbes magazine.
“Still, many other wealthy people, and ordinary folks, too, may prefer to keep their giving a secret, for example, because they shun the limelight, are concerned about kidnapping attempts if people find out they are wealthy, or want to avoid hostility from people philosophically opposed to the causes they support,” the story stated. “One of the few surveys on anonymous giving concluded that the primary reason donors like to keep their identities a secret is to avoid getting badgered by fund-raising requests.”
That study, conducted in 1991 by the  Center on Philanthropy at Indiana University, found that 50.6 percent of anonymous donors did so to keep from being solicited by organizations they did not care to support.
“When philanthropists talk about the spiritual aspects of giving anonymously, they often cite the 12th-century Jewish wise man Maimonides, who ranked anonymous giving as the second-highest level of charity,” according to Forbes. “Maimonides taught that the rich person shouldn’t feel superior for giving and the poor person shouldn’t feel inferior.”
“Likewise, some wealthy people today prefer to give anonymously because they feel very lucky that they had the brains or the right family to have more than the person down the block,” the story quoted Julie Salamon, author of the 2003 book  “Rambam’s Ladder: A Meditation on Generosity and Why It Is Necessary to Give” was quoted as saying. “They want to set the balance straight and don’t want a lot of credit for it.”