Charity And Your Estate

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Most charities, civic groups, religious institutions, and other nonprofits usually need to plunder additional income. Regular donations, paying membership fees, other fundraising mechanisms, etc., are often just not enough to generate all the necessary income the group needs. Without raising additional funds in one way or another, many organizations are unable to fulfill all aspects of their mission, and certainly fail to develop that mission in an essential visionary and evolutionary way. .

There are many ways for an organization to work with the people involved in the organization and its mission to combine the personal estate planning of those people with the needs of the organization. Four of these ways include:

1. Organizations can create specific and directed endowment funds. They can create it in honor or memory of an individual or occasion, or for a specific need. For example, a religious institution might create a dedicated endowment for scholarships, or whatever. A foundation that raises funds for a hospital could create an endowment for a program, type of medicine, research, etc. specific. Individuals would then be invited to donate to these two during their lifetime, as well as to their estate. Some estate endowments are just generous one-time grants without conditions, some are investment gifts with specific instructions to hold or how to use the funds, some can be general and some can be quite specific. Someone may also endow investments for a specific period of time, where dividends and / or interest go to the institution for a specific period of time (eg ten or twenty years), while the beneficial ownership is maintained by the estate and at a particular time. in the future the property becomes a family member (for example). Some endowments are quite simple and straightforward, while others are quite complex. It would be beneficial for most institutions to develop a relationship with a qualified estate professional so that there is maximum security, legal compliance, and benefits.

2. Many organizations are creating schemes for charitable life annuities. These annuities typically pay the donor or a delegate income for life (or a specific period of time), and can be single or joint annuities (in the latter case, interest is paid until the last one). person dies, but usually pays a lower amount (annual income, as actuaries will calculate a longer payment period). What remains when the donor dies goes to the organization. This method is often preferred by many because it combines the need of many to have a stable income during their "golden years" with the desire to support an organization that is close to their hearts.

3. Some organizations urge their most loyal members and supporters to leave them a bequest. This means that when the supporter dies and their estate is settled, the institution or organization will receive income. The only organizational limitation of this technique is that it is usually reversible, and the potential donor can change their will if they wish. Of course, an organization can also convince people to set up irrevocable trusts, where the person controls the use of the proceeds of that fund for life, but the principal goes to the institution upon death.

4. It is quite common to use life insurance as a bequest. Many people have older policies, for example, and they often get fully paid over the years. A person can decide to designate the institution or organization as the sole or partial beneficiary of the life insurance proceeds.

As someone who has been involved in financial planning for several decades, I advise charities to make estates and legacy planning part of their overall income and fundraising plan. When properly set up, it usually involves letting those interested, knowing how it might help, and motivating people to get involved.