Estate Planning in Retirement: Giving to Charity

07/15/20 • 55 min

Many people choose to give to charity as a way to give back to their community. If you are overfunded you may decide to give to charity while you are still alive as well as part of your estate after you pass. On this episode of Retirement Answer Man, we’ll continue the estate planning series to discuss different ways that you can give charitably now and as part of your estate. Stick around to hear the Q&A session with my esteemed guest Peter Lazaroff. What is a charity?

U.S. citizens are known for being extremely charitable people. Although many people help others as individuals, a charity is an organization that uses money and human capital to make a greater impact in the world. Different charities have different motivations and missions. When choosing a charity to give to it is important to look at its mission but also to make sure that the organization is a good steward of the money it receives. What motivates you to give?

Each of us has a different motivation to give to charity. Maybe your reasons are personal, or perhaps your life was affected by a certain event. Some people practice charitable giving as a way to model good citizenship to their family. Others are overfunded and use charitable donations to help ease their tax burden. For whatever reason you choose to give to charity it is important to make sure to find organizations that match your values. Why do you choose to give to charity? How you can give to charity in life

There are several ways to give to charity now while you are still alive.

If you are over 72 you may find that your RMD is more than you need. You can solve this problem and reduce your tax burden by making a qualified charitable distribution. You can give to one organization or spread out your contribution among several charities.

You can donate appreciated assets and avoid capital gains. If you donate all or a portion of appreciated assets directly to a qualified charity you can avoid capital gains. This could help you rebalance your portfolio or reposition your assets.

Use a donor-advised fund (DAF) like your own charity. With a DAF you can donate cash or assets. It’s like a simple version of a private foundation. You can choose one or many different charities to give to. Listen in to hear how you can involve the family in your charitable giving.

Use a trust in tandem with your charitable giving. Charitable remainder trusts or charitable lead trusts are a bit more complicated and require the help of an attorney. How to give in an estate after you pass

There are basically 2 ways that you can give to charity in your estate once you pass. You can either make a bequest in your will or name the charity as a beneficiary of an asset. The most simple and direct way is by making a bequest in your will. If you chose to name a charity as a beneficiary in an IRA asset then the charity would pay no income tax on that asset. How would you prefer to give to charity? OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN WHAT DOES THAT MEAN?

[3:08] What is charity?

PRACTICAL PLANNING SEGMENT

[7:04] What motivates you to give to charity?
[9:30] How to give to charity while you are still alive
[22:44] How you can give your estate

Q&A WITH PETER LAZAROFF

[26:44] Peter describes when decided to create his own estate documents
[30:38] Will a Roth conversion send your assets over the income limit?
[33:33] How to become a financial planner later in life
[44:30] How to navigate stock risk with your company

TODAY’S SMART SPRINT SEGMENT

[52:52] Examine your charitable giving to look for planning opportunities

Resources Mentioned In This Episode
XY Planning Network
PeterLazaroff.com
Rock Retirement Club
Roger’s YouTube Channel - Roger That
BOOK - Rock Retirement by Roger Whitney
Work with Roger
Roger’s Retirement Learning Center

There are several ways to give to charity now while you are still alive.

[3:08] What is charity?

PRACTICAL PLANNING SEGMENT

[7:04] What motivates you to give to charity?
[9:30] How to give to charity while you are still alive
[22:44] How you can give your estate

Q&A WITH PETER LAZAROFF

[26:44] Peter describes when decided to create his own estate documents
[30:38] Will a Roth conversion send your assets over the income limit?
[33:33] How to become a financial planner later in life
[44:30] How to navigate stock risk with your company

TODAY’S SMART SPRINT SEGMENT

[52:52] Examine your charitable giving to look for planning opportunities

Previous Episode

Estate Planning in Retirement: Giving to Family

Retirement is often the time when people begin to think more about estate planning. On this episode in the Estate Planning series, we’ll talk about giving. You want to be able to give to your loved ones but you also don’t want to rob them of their problems. That’s why we’ll discuss how you can give without enabling and you’ll discover how to optimize the impact of your gift. You’ll also learn how to decide whether you have enough to give. When you begin to think intentionally you’ll see that there are so many ways to give. Do you have enough to give?

It would be amazing to be able to give to your loved ones before you pass, but how will you know whether you have enough? The first hurdle in giving is being comfortable giving away your assets. What if you need that money later on? Actually that’s not so hard to figure out. Often times you’ll see that deciding how to give is less a money question than a mindest question. To be comfortable giving away assets you need to understand your level of fundedness. Are you underfunded, constrained, or overfunded? Once you understand this then you can begin to put a plan in place for giving. How can we give intentionally?

We give for many reasons. A gift is an item that you give someone without an expectation of payment in return. Giving is a way to express feelings and emotions and share those feelings with the receiver. You may not want your gift to your heirs to come in the form of a check from an attorney several months after your death. There are more intentional ways that you can give so that your family can feel the love behind that gift. Enhance don’t enable

As parents, we would love to solve all of our children’s problems for them, but then we would be robbing them of that learning opportunity. One of the best gifts we can give our kids is not robbing them of their problems. We need to find ways to help them but also allow them to figure things out for themselves. There are ways that we can give to them that enhance their lives rather than enabling them. There are many ways to give before you pass

Create memories - I think this is a fantastic way to give and to be able to enjoy that gift as a family. You could rent a house at the beach and help subsidize the family trip. Spend money to bring the family together.

Annual gifting - You can give anyone $15,000 per year without reporting it. You could help fund their Roth IRA or help buy them a house. You might be surprised when you find out how much the lifetime gift exemption is.

The gift of education - There are many ways to give for education. You can pay for college tuition directly. You could fund the grandkids 529 plan and allow the money to grow tax-free. You can also use up to $10,000 per year to fund a pre-college education if your grandkids are in private school. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN WHAT DOES THAT MEAN?

[2:20] What is a gift?

PRACTICAL PLANNING SEGMENT

[6:50] How do you give more intentionally?
[10:45] We don’t want to enable we want to enhance
[14:55] Retain optionality
[16:12] Ways to give
[27:43] What is a trust?

Q&A SEGMENT WITH TAYLOR SCHULTE

[36:59] Should we be investing in ESG funds in the “new normal”?
[44:08] A rainy day fund question
[52:18] A tax bracket question

TODAY’S SMART SPRINT SEGMENT

[60:06] How do you want your assets to be distributed?

Resources Mentioned In This Episode
Stay Wealthy podcast with Taylor Schulte
Define Financial
CuriousHistory.com
Rock Retirement Club
Roger’s YouTube Channel - Roger That
BOOK - Rock Retirement by Roger Whitney
Work with Roger
Roger’s Retirement Learning Center

Next Episode

Estate Planning in Retirement: Organization and Communication

By now you know how important estate planning is in retirement. But what is also important is to organize and communicate your wishes to your loved ones. In this episode, you’ll learn how to organize and communicate your estate planning wishes. We’ll chat with Sarah Bunnell from Everplans who will let you know how and why organization and communication are so important. Listen in to hear her expert take on these matters. And make sure you are signed up for the 6-Shot Saturday email so that you can receive an essential document checklist. An estate plan that is not organized or communicated correctly misses the point

Let’s say that you have just finished your estate plan. Congratulations on putting that all together! Now that you have completed this first step it is imperative that you take that next step and communicate your wishes to your loved ones. Once you get your financial assets and legal records organized then you’ll want to ensure that your loved ones know about them. The probate process is very involved so the more information that you can give them now will save them time and worry during an already stressful period. Who should you communicate your estate plan to?

Once you get your estate plan set up you’ll need to think about who you want to share it with. Do you have a trusted financial advisor? A CPA? An attorney? Who will be your point person? You’ll also want to make sure that you tell more than one person in your family. What would happen then if the family member that has all the information was involved in an accident with you? If you are single you’ll also want to consider who your trusted team may be. What about organizing your digital life?

Almost everybody knows that you should have a will and a medical directive. But what about your digital estate? How will your family access your digital files? Is your digital estate a mess? In these modern times of paperless statements, your heirs may not know what kind of accounts, insurance policies, or even properties you own. Without the passwords to the myriad online accounts, they won’t be able to make the payments or changes that they need to in the event of your passing. A bit about

Everplans

Everplans is an online digital vault that we use in the Rock Retirement Club. This online organizational tool stores all the estate information you would need to have organized. Everplans allows you to share information on a piece by piece basis either now or after death to the important people in your life. You can store funeral plans, wills, trusts, financial statements, even recipes, and videos. Learn more about Everplans and organizing and communicating your estate plan on this episode of Retirement Answer Man. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN WHAT DOES THAT MEAN?

[1:50] What is an emergency plan?

PRACTICAL PLANNING SEGMENT

[4:18] Why is the organization of your financial assets and legal records so important?
[6:50] What are the essential elements of an organized estate plan?
[14:30] How important is it to organize
[19:45] A bit about Everplans

Q&A SEGMENT