Hello from the community foundation!
Fall is just around the corner, bringing with it a natural opportunity to think ahead. This month, we’re looking at charitable planning from a longer-term perspective: how your estate plan can carry out your charitable wishes, how a family’s philanthropy can evolve over time, and why talking about and documenting your charitable intentions now can be such a valuable gift to the people you love.
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 charitable giving is part of the legacy you envision, learn how wills, trusts, beneficiary designations, retirement accounts, and charitable funds can work together to carry out your wishes.
From private foundation to donor-advised fund: A five-point checklist
A private foundation may have been a perfect fit when your family established it—but is it still? If the administrative work has begun to overshadow the joy of giving, our five-point checklist can help you and your advisors explore whether transitioning to a donor-advised fund at the community foundation might make sense.
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 giving plans 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 allowing the community foundation to be part of your charitable giving journey. We’re honored to help you think ahead, explore your options, and create a charitable plan that reflects what matters most to you. Please reach out anytime!
—Your community foundation
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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 comes on the heels of 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 charitable giving 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.
All of this means 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 charitable causes through the community foundation. Depending on your circumstances and goals, you and your estate planning advisors might consider approaches such as:
—Naming a fund at the community foundation 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 can be particularly worth discussing with your advisors because distributions that may be taxable to individual beneficiaries generally can be received by a qualified charitable organization—including the community foundation—without the same income tax burden.
—Leaving a specific dollar amount through your will or trust. Perhaps you want $25,000, $100,000, or another amount to establish or add to a fund at the community foundation. Your attorney can incorporate the appropriate language into your estate planning documents.
—Leaving a percentage of your estate through your will or trust. Instead of specifying a dollar amount, you might direct that a percentage of your estate pass to a charitable fund. A percentage gift can adjust along with the value of your estate over time.
—Creating a fund to support favorite organizations or causes. Your estate gift could establish or add to a designated fund benefiting an organization you care about, or a field-of-interest fund supporting an issue or area of interest that has been meaningful to you.
—Leaving a gift to meet changing community needs. You might instead leave all or a percentage of your estate as an unrestricted gift to the community foundation. This approach entrusts the community foundation to put charitable dollars to work where they can make an important difference as community needs and opportunities change over time.
These approaches do not necessarily have to stand alone! Charitable components of your estate plan might incorporate more than one document, beneficiary designation, asset, or type of fund to accomplish your goals. What’s more, setting up a charitable giving structure is especially important if you are anticipating a business exit at some point in the future.
For these reasons, National Estate Planning Awareness Week is about more than simply checking “make a will” off your to-do list. It is an opportunity to look at your entire estate plan and ask whether your documents and beneficiary designations work together to reflect the people, organizations, and community you want to support.
If charitable giving has been an important part of your life, the community foundation team would be honored to help you think about how it can become part of your legacy, too. We can work alongside your attorney, CPA, and financial advisor to help you explore charitable options and determine what type of fund may best carry out your intentions for years—and perhaps generations—to come.
From private foundation to donor-advised fund: A five-point checklist
Many families established private foundations years ago because they wanted to make a lasting difference in their communities. Those foundations have supported important causes, brought family members together around charitable giving, and created meaningful legacies.
Over time, though, circumstances can change. Children and grandchildren may live in different parts of the country. Board meetings become harder to schedule. Administrative responsibilities grow. Tax filings, investment oversight, recordkeeping, and compliance with complex rules can begin to feel like more work than anyone anticipated.
For many families, that's when it becomes worthwhile to ask an important question: “Would a donor-advised fund at the community foundation better serve our charitable goals?”
There's no one-size-fits-all answer, but if you're beginning to explore the possibility, here are a few steps to consider as you discuss the options with your family and your tax advisors.
Be realistic about what’s working and what’s not.
Start by taking an honest look at how well your private foundation is working today. Is it still helping your family accomplish what you hoped it would? Are family members actively engaged, or has the responsibility fallen to just one or two people? Sometimes the answer isn't that the private foundation has failed—it's simply that your family's needs have evolved.
Consult the specialists.
Next, talk with your attorney, CPA, and financial advisors. Transitioning from a private foundation to a donor-advised fund involves important legal, tax, and financial considerations. Your advisors can help you evaluate the options and factors from a tax and legal perspective and determine whether the approach makes sense for your family's particular financial circumstances.
The community foundation is an important part of the conversation, too, even in the early stages. Be sure to introduce your advisors to the community foundation as soon as you can. Our team can explain how a donor-advised fund works, answer questions about the transition process, and, importantly, help you explore ways to preserve the identity and charitable purpose your family has built over the years. In many cases, the donor-advised fund can even continue under a familiar name, allowing your family's charitable legacy to live on in a meaningful way.
Identify decisionmakers.
As you consider the transition, the community foundation team can help you think about who should serve as advisors to the new fund. One of the strengths of a donor-advised fund is its flexibility. You can name family members to recommend grants today and designate successor advisors to help involve future generations in your family's philanthropy. In many ways, the advisors to a donor-advised fund resemble a private foundation’s board of directors.
Move to implementation.
If your family decides to move forward, the transition itself often can be handled efficiently, although it requires careful planning. Generally, the private foundation distributes its remaining assets to the community foundation to establish or add to the donor-advised fund after reserving sufficient funds to pay final accounting, legal, tax preparation, and other closing expenses. Your advisors will then help complete the foundation's final tax return and any required state filings.
Carry on with your good work!
Once the transition is complete, your family can continue supporting the organizations and causes you care about—often with significantly less administrative responsibility. Rather than spending time on compliance and paperwork, you can devote more energy to what likely inspired the foundation in the first place: making a difference.
Every family's situation is unique, and moving from a private foundation to a donor-advised fund is an important decision. If you're wondering whether it might be the right fit for your family, we'd be delighted to visit with you and your advisors. The community foundation is here to help you evaluate your options and continue building the charitable legacy you've worked so hard to create.
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! And the population as a whole is getting older, too. The share of Americans aged 65 and older grew from 12.4% in 2004 to roughly 18%, with projections estimating that roughly one in five Americans will be 65 or older by 2030. What’s more, in the United States 37% of extended families of older adults include an older relative with dementia.
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 have supported the same organizations for decades and want that support to continue. Maybe there is a particular cause you hope your family will continue to champion. Or perhaps you simply want a portion of your estate to remain in the community, available to address needs and opportunities that may arise long after your lifetime.
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 have not been clearly discussed or documented.
Imagine, for example, that a parent who has supported a particular organization for 30 years wants to make a significant gift later in life. Is the gift consistent with a long-standing charitable intention? Is it a new idea? Do family members understand why the organization 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. Depending on your goals, that might include establishing a fund at the community foundation during your lifetime, documenting plans for a future charitable fund, including charitable provisions in your estate plan, or involving family members in 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. New community needs emerge. 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.
This can be especially meaningful when family members are included in conversations with the community foundation team. Conversations about charitable giving offer an opportunity to talk about much more than money. They can help children and grandchildren understand the experiences and values that shaped your generosity—and give them an opportunity to share what matters to them as well.
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 legal and financial safeguards designed to protect older adults from exploitation and undue influence, 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 will not be trying to determine your charitable intentions for the first time after those questions arise. One of the most valuable things you can do is start the conversation early.
Reach out to the community foundation!
At any stage of your life, the community foundation team can help you explore questions such as: What do you want your giving to accomplish? Which organizations or causes are most important to you? Would you like your children or grandchildren involved? Should your charitable plan continue after your lifetime? And how much flexibility would you like your plan to have as organizations and community needs change? The answers can help you and your estate planning and tax advisors determine how charitable giving fits into your broader estate and financial plans—and help avoid challenges in the future.
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.
The team at the community foundation is honored to serve as a resource and sounding board as you build your charitable plans and pursue your philanthropic objectives for making a difference in the community. This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice. Please consult your tax or legal advisor to learn how this information might apply to your own situation.