High school and college graduations traditionally mark the beginning of summer vacation. And if you are not a student, the reliable marker for vacation season is the long Memorial Day weekend. As we pause to reflect on sacrifices that have been made by many to secure our freedoms, the extra day off work is often judiciously used to extend vacation plans without burning another vacation day. If you are a history buff, it’s a perfect time to combine remembrance and relaxation with a visit to a historic landmark.
Whether you are headed out on a great American road trip for our nation’s 250th anniversary or planning a once-in-a-lifetime trip to a bucket-list location on another continent, vacations require planning. There is something about planning a vacation that inspires many people to make sure they have their affairs in order. On more than one occasion I have met with donors who said the reason they came to see me was they were planning a trip and wanted to take care of some estate and charitable planning before they left.
If you fall into that category, meaning you have an interest in charitable giving and you are wanting to get your affairs in order before your next trip, let me offer a simple two-step solution to leave another worry behind and help you truly enjoy your vacation. It’s as simple as creating a basic charitable plan using a donor-advised fund, and directing a gift from your estate to fund it.
Step One – Create a simple, unfunded, donor-advised fund with a succession plan that represents a good faith estimate of your current charitable interests. You may have a very detailed plan in mind, but if you don’t, don’t let the lack of detailed plan paralyze you from following your general interest in doing something charitable. As an example, you may have an interest in creating a scholarship for kids from your hometown high school and a short list of charities you would like to support with an endowment. We could draft a succession plan in your charitable fund that looks something like this: “25% of the assets of this fund should be used to create an endowed scholarship fund for students with financial need graduating from XYZ High School, and 75% should be used to create an endowed designated fund. The designated fund should distribute income annually as follows: 10% to Charity A, 20% to Charity B, 40% to Charity C and 30% to Charity D.” That’s all it takes to document your charitable legacy. The beauty of this plan is that it can be changed, free of charge, any time you want to change it, for the rest of your life. The simple succession plan in your donor-advised fund always incorporates your current charitable interests, and you may even decide you want to use the fund for lifetime charitable giving as well. Creating the charitable plan is an important step, but it is only one of two critical steps to accomplish your charitable objective.
Step Two – Take the necessary legal steps to fund your charitable plan. As you review your financial accounts and testamentary documents such as wills and trusts, you must identify and direct a particular asset or a portion of your estate to the charitable fund created in Step One or your plans will not come to fruition. The easiest option is to name East Texas Communities Foundation as the beneficiary of an account such as an IRA. On your IRA beneficiary designation form you might include language like this “50% of this account is directed to East Texas Communities Foundation for the benefit of the John and Jane Doe Donor Advised Fund.” If an IRA is not your preferred asset, you need to visit your attorney and incorporate similar language in your will or trust which might look like this: “60% of the rest and residue of my estate should be directed to East Texas Communities Foundation to be added to the John and Jane Doe Donor-Advised Fund”. Without the actual direction provided in a beneficiary designation or more formal legal document such as a will or trust, no assets will ever find their way to your charitable fund. However, once you determine which asset or how much of your estate will go to support your charitable interests, the details in your charitable fund at ETCF are much easier to update than your testamentary documents. This two-step plan can set your legacy charitable giving in motion and give you peace of mind so you can enjoy your next adventure. Perhaps setting up a charitable plan at ETCF and taking steps to direct a gift to fund your plan before you leave for vacation is your next best opportunity to give well. Bon Voyage!
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