What in the World is Planned Giving?

by Roger Ellison, CFP

Planned giving may not be a familiar term. Even if it is, it still may seem somewhat strange and confusing. Actually it is not. Quite simply, completing a planned gift requires the help of another; you canít do it by yourself!

You can write a check and give it to the church all by yourself. Thatís not planned giving. However, decide that you would like to make a gift to charity and receive an income for life, give your home to a charity yet still live in it for the rest of your life, or provide an income to charity now so that your children or grandchildren can later receive an asset in a highly tax advantaged manner, then youíre talking planned giving. Even so simple a decision as including a bequest in your will for a charity or charities involves planned giving.

Planned giving is especially advantageous to anyone doing estate planning, wishing to benefit a charity or charities (most people include several), facing significant capital gains, gift or estate taxes, or anyone with a life or estate planning need coupled with a desire to benefit charities they love. Whether the desire is to leave a legacy and to touch lives beyond your own, avoid or reduce taxes, increase income, realize tax free appreciation, provide for an income you canít outlive, protect assets from creditors, provide for retirement, provide for expert management, or diversify assets, planned giving offers practical solutions to everyday needs and desires. Young or old - children at home or empty nested - people from all stages of life can benefit from using these concepts.

Planned giving allows you to expand your possibilities and realize more options. Some are very sophisticated and involved, some are incredibly simple. Each one provides the potential to practically address a need in a fun and exciting way. The potential for real joy is great.

John and Estella Duetsch (a purely fictitious couple) have just finished putting three children though college. Theyíre rewriting their wills and plan to include their church, the university their children attended, and a local charity with which they have been involved. In a conversation with the staff at their local charity, they discover options they had never considered. A planned giving officer told them how they could place one of their highly appreciated assets in a special agreement to benefit those charities. In turn, they could enjoy an even higher income for life, a very nice income tax deduction, avoid any capital gains tax and have the joy of making the gift now rather than after their deaths. And through this special arrangement, they will leave a legacy of those things that are dear to them and evidence the meaning of their lives. In very simple terms, this arrangement included both giving and receiving.

Consider another example. Ruth Corona lives in modest circumstances, depending on a pension from her career in business and Social Security, plus supplements from her CDs. Long a donor to a local charity, she discovered that she can get a much higher rate of income from a life income gift to that charity than from the CD. She had wanted to leave a nice gift to that charity anyway, but was concerned there might not be much left at the end of her life. Upon making that gift, she will get a high and fixed income every quarter for as long as she lives, a nice income tax deduction, and the satisfaction of making a gift during life that was far beyond what she ever thought possible.

Luis and Friona Campbell were very comfortable and included significant giving to a number of charities in their annual giving. They also had several children for whom they would like to provide a nest egg twenty to thirty years down the road. Through one of their charities, they learned of a plan that provides income to charity for a number of years, then transfers a substantial asset to their children at the end of the term. What excited the couple so much was that they could make the arrangements now at greatly reduced or no transfer taxes regardless of how much that asset appreciated during the time the plan was in place.

While each of these planned giving examples is very different, they are very similar in that each is made during life, each offers its own unique set of benefits, and each one included the help of others to make the gift. Each one brings a healthy sense of joy and new possibilities. Perhaps more important is that each one reflects the deepest values about those things the donors admired most.

Roger Ellison, Vice President for Planned Giving, at the West Texas Rehabilitation Center Foundation, is a Certified Financial Planner who provides gift and estate planning services on a no cost, no obligation basis. He may be reached at 325-223-6309 or roger@rogerellison.com


© 2019 Roger Ellison