August is National Make a Will Month, and the publicity surrounding this designation may prompt you to question if your affairs are in good order. Of course, making sure you have established an estate plan and executed corresponding legal documents is a priority for any attorney, accountant, or financial advisor who practices in the field of estate planning, tax, or wealth management. Still, it’s always ultimately your responsibility to keep your estate plans up to date and review them on a regular basis.
Indeed, despite the many cautionary tales arising out of the Covid-19 pandemic, most Americans do not have a will. Even those of us who do have estate plans in place may not truly understand the difference between a will and trust (and the reason we still need a will even if we have a revocable living trust). We may not understand that a charitable bequest can be part of our estate plan whether the planning vehicle is a will or whether it is a trust.
Of the $485 billion given to charity by Americans in 2021, according to Giving USA, 9.5% of that giving came from bequests–that’s $46 billion. Giving USA’s data visualization tool illustrates the ebbs and flows of bequest giving, which has long been a significant component of philanthropy.
Research reveals fascinating psychological factors behind a person’s decision to leave a bequest in the first place, which helps to understand the motivation for leaving a gift to a charitable organization in a will or trust. Not surprisingly, altruism has long been one of those factors. Bequests to charity are not a new idea. Examples of high-profile estate gifts date back centuries. You may be familiar with the bequests of Benjamin Franklin, who established testamentary charitable trusts dedicated to supporting Boston and Philadelphia tradespeople, and George Washington, who left bequests in his will to colleges and trade schools.
Our team welcomes the opportunity to work with you and your professional advisors to establish bequests to existing funds or by creating a shell agreement at the community foundation. Gifts can come to the community foundation through a will or trust or a beneficiary designation on a qualified retirement plan or life insurance policy. Make a Will Month is also a good time to remember that bequests of qualified retirement plans can be extremely tax-efficient. By naming EWVCF as the beneficiary of your traditional IRA or other tax-deferred retirement accounts, whatever is distributed directly to a fund at the community foundation from such a retirement plan will not be subject to income tax or estate tax.
