This article originally appeared in Cleveland Jewish News, March 14, 2018.
By Becky Raspe, CJN Special Sections Staff Reporter
Charitably-inclined people may find it difficult to choose an organization to leave a planned gift to.
According to Patrick Tulley, chair of the wealth planning group at Kohrman, Jackson and Krantz, and Shane Bigelow, senior vice president and managing director at Bernstein Global Wealth Management, also known as A.B. Bernstein, both in Cleveland, individuals usually choose organizations important to them.
“Whether it is research for illnesses that afflicted friends or family, or causes the individual supports, it (is) all about what moves that person emotionally most often,” Tulley said.
Bigelow said individuals should only make planned gifts because they want to, not because of tax benefits.
“It’s about the passion someone has for an organization,” he said. “We always tell clients, don’t use the charitable structure for a tax benefit. (Planned gifts) are a happy byproduct of charitable people.”
Tulley said there are many ways to plan for charitable giving, especially if they want to benefit many organizations.
“This can be accomplished in many ways and donor-advised funds are a good way to do it,” he said. “That slows the donor and allows them to have some input in who the recipients of the funds (are).
“In a low-interest environment, we see a lot of charitable annuity trusts. The ability to benefit multiple organizations during the term in the trust depends on the individual, the size of the gift and what they are trying to accomplish.”
When choosing the organization, Bigelow said his first step is to determine what one’s goals and passions are.
“When someone presents us with the idea of doing a planned gift, the first step is usually why,” he said. “And that can inform them of whether they are doing it at the right time and if it’s the right choice for them. The reality for those organizations that receive a planned gift is that they don’t know when it will arrive. Make sure the time frame of what they are giving and when it will arrive is consistent with their goals.”
Both professionals said there are options if an individual wants to change beneficiaries.
“Under charitable trust arrangements, donors can reserve the right to change who the organization is so long they are a qualified charity,” Tulley said. “Each year, either the donor or the individual designated can make a selection of who the recipient of that contribution will be paid. That can remain the same or be stated in the instrument to never change or they can reserve the right to change it.”
Bigelow said though one can reserve the right to change beneficiaries, there are also downsides.
“The key is when they make the initial planned gift to plan for that option,” he said. “You can reserve the right if that organization’s direction changes. But with the flexibility, some organizations might not consider the gift as a gift. Unless the gift is irrevocable, some organizations won’t credit them as a donor.”
According to Tulley, it comes down to making sure the individual follows his or her heart.
“While tax savings is a component of charitable gifts, it ought not to be your sole and primary motivation for making the gift,” he said. “Seek the advice of professionals, whether it be an accountant or estate planning attorney. That way, if you’re looking down that avenue, you can make sure it’s the most effective way.”