Planned Giving Question

[45th Birthday]

We have a number of educational and charitable organizations named in our trusts. Revisiting estate issues, I was a bit surprised at the amounts that would be given if we both died today, for example. Several over $400K, the smallest is $100K. These are stated as a percentage of the pie, not pecuniary bequests.

Since we have never notified any of them of our plans, they have no knowledge. And, we have provided no specific instructions on how the funds are to be used.

Has anyone had experience opening discussions with charities that will be recipients of planned gifts to let them know your wishes on how to use the gifts?

Complicating issues: We could always change the terms of the trusts and increase or decrease the gifts. Also, since they are stated as percentages, the actual amount is unknown. Although, if Fidelity RIP under average conditions is to be believed, the largest gifts would be comfortably over $1 million at the end of our life expectancy.

 

[joeea]

Has anyone had experience opening discussions with charities that will be recipients of planned gifts to let them know your wishes on how to use the gifts?

Not all charities will honor specific requests on how your gifts will be used.

When my aunt passed, she left virtually all of her estate to the church. While her wish was that all of the money would go to her specific parish, that's not how the church operates.

 

[RunningBum]

I've always figured that specifying how my donations are used is pretty much meaningless. If a foundation has 25% for admin and overhead, and 25% for each of projects A, B, and C, and I say I want all of my money going toward project C, the next 3X of income matching my donation is going to go toward overhead, A, and B. I find it very likely that project C will get a bonus amount on top of equal funding. The exception would be if you can specify something that wouldn't otherwise be funded. Maybe it's nice while you are around to know that your money went toward a certain new building or project, and maybe it's nice for yours heirs if you aren't around, but that seems like a "feel good" gesture.

 

[OldShooter]

... Has anyone had experience opening discussions with charities that will be recipients of planned gifts to let them know your wishes on how to use the gifts?

Complicating issues: We could always change the terms of the trusts and increase or decrease the gifts. Also, since they are stated as percentages, the actual amount is unknown. Although, if Fidelity RIP under average conditions is to be believed, the largest gifts would be comfortably over $1 million at the end of our life expectancy.

Yes. We have some money going here: https://www.gracf.org/ It could end up being the same order as what you are talking about. We sat down with the director and arranged for our money to go into a new named fund with specific grant criteria that we have provided. We talked about overhead, how they will manage the money, initial reporting to us --- everything. They have kind of an unusual setup, so their adminstrative tax on this kind of donation is only 1% per year. You will not find that low a fee at many places, I think, but it is one topic to be discussed at your meeting.

Re uncertain amounts/percentages, charities are used to this. It's no big deal.

You would not spend that kind of money for any other purpose without doing extensive due diligence, checking references, possibly getting independent reviews/opinions, etc. Why should giving to a charity be any different? I would suggest that you contact the development directors or organization executive directors at your potential targets. At that level of giving they should be very anxious to accommodate your needs and wants. And, if not, there are tens of thousands of other good causes who will be.

 

[45th Birthday]

Yes. We have some money going here: https://www.gracf.org/ It could end up being the same order as what you are talking about. We sat down with the director and arranged for our money to go into a new named fund with specific grant criteria that we have provided. We talked about overhead, how they will manage the money, initial reporting to us --- everything. They have kind of an unusual setup, so their adminstrative tax on this kind of donation is only 1% per year. You will not find that low a fee at many places, I think, but it is one topic to be discussed at your meeting.

Re uncertain amounts/percentages, charities are used to this. It's no big deal.

You would not spend that kind of money for any other purpose without doing extensive due diligence, checking references, possibly getting independent reviews/opinions, etc. Why should giving to a charity be any different? I would suggest that you contact the development directors or organization executive directors at your potential targets. At that level of giving they should be very anxious to accommodate your needs and wants. And, if not, there are tens of thousands of other good causes who will be.

Thank you, very helpful.

 

[SecondCor521]

I have some bequests like that in my will but they are stated as "$X or Y% of my estate, whichever is [larger|smaller]". Somehow that seemed to help my little brain be happy with these bequests given that my estate could be big or small when I die.

 

[JoeWras]

Ah, then there is the frugal librarian who saw his gift go to football with little to the library:
https://www.businessinsider.com/uni...ibrarian-donated-million-dollar-estate-2016-9

What we are doing is setting up our Donor Advised Fund to dribble out 5% a year after our death to various charities. It becomes an ad hoc endowment.

The point being, I don't want the charities to get drunk on the gift. Even the best seem to lose their collective minds when they get a big gift.

Another advantage of the DAF is that we don't have to change the Trust/Will to modify our legacy list of charities. The trust/will points to the DAF legacy, and the legacy instructions can change. Of course, that also requires a certain amount of trust between you and the DAF.

 

[RunningBum]

The drawback to a DAF is that you've committed the money to charity, just not a specific one. If you're not sure if you'll have enough, it could be nice to leave the money accessible to you, and if you die with some left, your will handles the distribution. A DAF is a good tool and I have one, but it may not be the commitment
the OP is looking for.

 

[OldShooter]

For those in RMD-land, a donor-advised fund is not eligible for a QCD. Big problem. They also don't work well when you're dead and cannot provide advice.

What we did (see post $4) is to establish with the charity a separate, named, fund to be carried on their books. Then we worked out language that specifies exactly what the fund can be used for.

In our case, our money will to to individuals in "crisis." This is something that the foundation is experienced with. Crisis is things like needing to buy steel-toes boots in order to take a job that has been offered or a guy in a halfway house ineligible for a driver's license and needing a bicycle to get to work. These are real examples. Another was a poor widow living marginally on social security and needing a roof on her trailer home. She got down payment money for the roofer and he agreed on a payment plan that she could handle. "Chronic" issues like someone who is not paying their heating bill or their rent and hence is facing cutoff or eviction are not eligible. But, important for us, the money cannot just be thrown in some kind of amorphous pot with a bunch of money from others and a nice-sounding purpose.

But -- critical -- it is not a donor-advised fund.

 

[ShokWaveRider]

We have no children and all our other family are remote, and we really do not spend much time with them. We are splitting our nest egg between 4 Charities they will get 25% everything we have left after we Kark it. 2 are animal related and others are children related. Basically those who get left out through no fault of their own. No churches. We do not really give anything regularly now we are alive other than Betty Griffin House with clothing and our discarded items that can be sold. That does not mean we do not give at all, and we do occasionally, just not regularly or planned. We figure leaving our nest egg to them when we are gone will make more impact as it will be a lot more in one go.

 

[JoeWras]

The drawback to a DAF is that you've committed the money to charity, just not a specific one.

For those in RMD-land, a donor-advised fund is not eligible for a QCD. Big problem. They also don't work well when you're dead and cannot provide advice.

Woah, time out. I'm talking about after you are dead. It is a legacy DAF. In your will/trust, you can give to the DAF. After you are gone.

Yes, the advice part is troublesome because death is troublesome. You can designate a new adviser to handle your legacy DAF.

 

[JoeWras]

First I want to say that I know that DAF is not for everyone. I'm just giving another option. This may not fit the required needs. I'm throwing it out there.

In a nutshell, a DAF can be set up so you have control of all your funds until you die. Actually, the DAF isn't even part of those funds, they are yours with complete control until you die, with no relation at all with the DAF. You just set up a plan with the DAF and don't fund it. Then you designate in your will or trust some (or all) of your assets to the DAF where your charities are described. It can be a split (by percentage) of an immediate grant. Or it can be a recurring grant, a sort of endowment. You do have to designate a plan for your designated charities, and perhaps an adviser, otherwise VGC will just use them in their general fund.

More here from VGC, but other DAFs may have these options too: https://www.vanguardcharitable.org/individuals/leave_legacy

From the brochure:

Fulfill your philanthropic intentions beyond your lifetime by establishing a plan now to gift to charity later. Deferred giving options allow you to donate your assets when you pass to Vanguard Charitable, which will then create or add to an account and grant to charity in your honor. Vanguard Charitable can be named as a beneficiary to the assets listed in Figure A, allowing you to move assets from a taxable estate into a tax-free, philanthropic environment.

Family, friends, heirs, professional advisors or even Vanguard Charitable may be named advisor to the account.
https://cdn.vcapps.org/sites/default/files/upload/VGPL_102017_1.pdf

 

[RunningBum]

OK, I wasn't thinking of using a DAF that way. I guess it makes some sense. My thought is that a larger charity won't view my legacy as any huge windfall, and a smaller one would seem more likely to disband, lose it's focus, or any number of things that would make me not want my money to go there. Whoever you name as the advisor to the account can adjust, but really that just means you've given them control, and perhaps the headache of managing the fund. But you can hope and trust they'll honor your legacy and use the funds in the way you desired.