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January 11, 2010

Charitable Giving as Part of an Estate Plan

Filed under: Uncategorized — admin @ 4:35 pm

People have a variety of motivations involved in leaving part of their estate (either cash, stocks/investments, or other assets) to a charity—perhaps the charity is close to their heart, ie a foundation set up to research a disease that has personally affected the donor, or an organization providing services of interest to the donor—an animal shelter, or a mentoring program. Certainly, making a donation to an animal shelter in honor of a beloved pet makes far more sense then leaving money to the pet itself!

Others may just wish do “do good” in some way…while still others are looking for a way to minimize taxes in their lifetime, and beyond, through careful estate planning. Regardless of the reason, virtually any charity will be extremely grateful for a donation of any size. And regardless of your motivation, you often WILL receive tax benefits on your donation.

There are several ways to make a contribution to a charity. Over this article, and the next post, we’ll discuss the four most common ways to include charities or other organizations as beneficiaries in your estate plan; you will benefit from tax relief, and they will put your gift to good use. The first two options to discuss are:

A charitable bequest is a simple, fairly straightforward provision made in your will that allocates cash or other valuables to a charity upon your death. Perhaps you are donating a car to the Red Cross, or a lump sum of $10,000 to the local animal shelter. These can be spelled out in your will (with the help of your attorney) or trust documents. There are no limits or maximums to the amount that can be donated, and the donations do serve to reduce the size of your estate, limiting the tax liability. You can make the gift an “absolute”—such as, “I would like to donate $10,000 to the American Cancer Society”, or a percentage of your estate: “I would like to donate 10% of my total estate to the Humane Society”.

Donor-advised funds are another option; here, you make an initial contribution (typically at least $10,000-25,000) to a fund, and then can control how the money is allocated through grants or contributions to charities or organizations of your choice. Again, there are management fees involved, but the tax benefits may outweigh those fees. A number of the larger fund companies have options for such donor-advised funds, and if this of interest to you, consult your advisor.

Prior to making a contribution to any charity, it is a good idea to investigate their efficiency and expense ratios; your advisor can help you with that, or there are several good websites that rate how effectively groups of any size spend their money.

Charitable giving as part of an estate plan is a nice thing to do—oftentimes, with a silver lining of tax benefits. Consult your advisor for more information.

January 6, 2010

Taking Stock in the New Year

Filed under: Uncategorized — Tags: , , — admin @ 4:34 pm

2010 is here and if you ask around, many say it’s come none to soon! 2009 was a difficult year for a lot of folks, in Missouri and across the US, with a troublesome economy, and lots of questions about where our country was headed.

So more than ever as we look ahead to the new year it is time for resolutions and making sure you are organized and ready to face the months and the year ahead—in your house, within your family, and always important: your finances.

As you set resolutions for the new year, think about your financial picture. If you have an advisor that you work with, schedule a meeting with him just to check in and make sure your investments are still tracking your goals. If you don’t have an estate plan established, with a will and documents covering powers of attorney, you should do so. Maybe you have a resolution to be a better saver; see if you can set up some automatic withdrawal plans so that a portion of your paycheck goes into a savings account, or into a investment fund or an IRA, automatically.

It’s a great time to review levels of coverage, as well, for your life insurance policies—whether they are term life, variable life, or if you have several policies (as part of an employer’s benefit package and on your own, for example). Discuss with your advisor what your needs are, for your life insurance policy (an investment vehicle, to cover your spouse and/or children in the event of your passing, etc)—and be sure that together you agree that your children or spouse are covered at the appropriate level; an advisor can help you run scenarios on what college expenses or the like might be. Be sure that you are not “over-covered”—this is less common than being “under-covered”, but if you have too much life insurance, together you and your advisor may determine that your money could be better invested (tax wise and “potential for growth” wise) elsewhere.

And, it may be a wise time to ask your insurance provider if there is anything you can do to make your policy more cost-effective (changing deductibles, etc) for a homeowner’s or a health insurance policy.

The big picture: as you set resolutions and make a plan for goals for the year, don’t neglect your financial picture. A conversation with your advisor or some simple steps put in place now can have an impact on your entire year, so don’t delay!