Focus, Law, and Nonprofits

Planned giving isn’t restricted to wealthy families

Charities often have the paperwork necessary to simplify the process.

October 11, 2013
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While planned giving might seem like a cumbersome process, estate-planning attorney Jeffrey Beswick said it is often simpler than people would expect.

Beswick, an attorney at Varnum in the firm’s Grand Haven office, noted that while some estate planning requires more sophistication, it can also be as simple as naming a beneficiary designation on a life insurance policy or on retirement accounts.

“Many of the arrangements involving planned giving are pretty simple, and they come from families who are not terribly wealthy and just want to perpetuate what they’ve done in their lifetime,” he said.

Beswick encourages people to consider five factors when weighing the option of planned giving:

  • Am I passionate about something? Is there an activity or institution that I want to preserve and enhance?
  • Do I make charitable gifts during my lifetime? If so, why not do so as a legacy after I'm gone?
  • Am I interested in making a positive impact on the world forever?
  • Do I know any charities, schools, churches or organizations that share my passion and vision?
  • Am I willing to make a call — to my church, charity, community foundation or lawyer — to find out how to make a planned gift?

Beswick said being passionate about a cause or organization is a great place to start when thinking about planned giving. Popular planned-giving recipients include educational institutions, churches and community foundations.

He noted that West Michigan residents are very philanthropic and many give to charities on an annual basis. In fact, Grand Haven was ranked fourth in the nation in giving per capita just a few years ago and routinely is ranked in the top 25. The Grand Haven Community Foundation created a Legacy Society a decade ago that included 20 names of people planning to give after their death. Today, that list includes 365 names.

So Beswick knows the interest is there, but sometimes people are intimidated by their perception of what is involved. Beswick noted that calling an attorney doesn’t necessarily need to be the first step, and he often encourages people to call their favorite charities first.

“Many organizations have language or documents or provide help,” he said. “If you want to make a planned gift to United Way, all you have to do is pick up the phone and call United Way. They will provide you with language, with examples, with alternatives. The same for community foundations — they are excellent at this.”

He noted that in creating a planned-giving arrangement, many people identify their top charitable organizations and then spread their donation across those groups. Donations can be restricted, meaning someone can specifically designate what the donation may be used for: environmental causes, a scholarship for a specific major, or funding a position at an institution, for example. Or, the money can be left unrestricted so the organization can determine its use.

While planned giving continues to increase, Beswick said the economic downturn of the past five years has slowed its progress. He said one of the main factors in decreased giving is due to people’s concerns over health care costs and the fear that they could outlive their money. Another factor is the rising cost of education, as many families want to set aside money to ensure a college education for their children and grandchildren.

But he notes these fears needn’t hinder planned-giving arrangements because in many cases planned giving is retractable.

“You can always, before your death, change these arrangements,” he said. “Typically, they are not locked in stone. There are some more sophisticated techniques that allow you to make a gift and get some tax benefits, and those gifts are permanent, but many planned gifts are revocable, so you can change your mind.”

He said many families in the West Michigan area are involved in planned giving and want to instill the same values in their children.

For example: “I’ve got a client who says, ‘I want to make a gift to a community foundation when my wife and I are gone, but in the meantime we’d like to educate our kids about how to do this,’” he said. “They are going to leave some of their family dollars to a community foundation when they are gone, but in order to jumpstart the process, they are putting some money into the community foundation now — starting the ‘Jones Family Fund.’ This isn’t a planned gift — it’s just annual charity giving, but then what you can do with dollars in a community foundation is you can put in the money now and then dole it out over time.

“You could put $50,000 into the community foundation and annually gift as a family out of that $50,000 fund — let’s say, $10,000 a year for five years. You can meet with your kids to decide who gets the family gift this year, and have the kids be involved in the process.

“Long term, you might plan to pour a million into the family fund, but in the short term, you start something small and teach the kids about how we do this.”

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