Trilogy Financial, a privately-held financial planning firm with more than $2 billion in client assets, utilizes a combination of our latest technology and broad perspective to help you advance your tomorrows.

Planned Giving

One of the many critical conversations we have with our clients raises the question of legacy. Without question, no matter what your beliefs, we can agree that a part of us lives on. We carry in the relationships we’ve had, the people we’ve cared for and those that have cared for us. And we live on in the investments we’ve made. The investments in institutions, causes and hopes for the future. And while so much of this legacy is ephemeral and difficult to grasp while we are still living, there are some ways in which legacy can be much clearer through the lens of estate planning.

Many fallacies exist around the topic of legacy planning. The most prominent of which is that legacy planning is only for the super wealthy. So many people say, “I don’t have that much savings so I probably won’t leave anything anyway.” The truth is that except for those truly without assets, this is rarely true. Because we don’t know when it will be our day to go, we have to maintain an asset base for as long as possible. This is essential to financial planning. For this reason, among others, it is very likely that you will leave a variety of things behind you. It is true, as they say, that “you can’t take it with you.” But you can leave a piece of you behind with whatever remains. Herein lies the critical role of legacy planning.

Let’s take a traditional planning family at Trilogy. A married couple, 2.3 adult children, a handful of grandkids. They’ve got a home that’s paid off a couple of cars. On the liquid assets portion of the ledger they’ve got a couple of IRAs from old 401ks and an investment account with a little bit of “rainy day” money.

Regardless of when poor health or a long-term care event or any other kind of tragedy hits, some significant portion of the above will likely be in place. Perhaps in a substantial state. Now while many people choose to simply leave everything they have to their immediate family, there are many who in small or great degrees want to leave a financial legacy to associations and entities of their preference. By leaving clear instructions their will or trust, these families give clear instructions that should anything be left in XYZ account or asset, those remains should be gifted to ABC non-profit organization.

This strategy of setting aside an asset in your estate plan for a particular entity or organization is called planned giving. In some cases it represents a gift of a particular dollar amount, but more often it is defined by the ear-marking of a particular account (like an IRA) for gifting, no matter what the value of that asset is at the time of passage.

As we help clients consider their legacy plan, we are often brainstorming with them where they would like to see their values live on past their death. And while a great degree of this comes down to providing some asset to their children and grandchildren, in many cases, the client’s wishes (like yours perhaps) extend more broadly than that:

  • They have been actively involved in their local church their entire lives and want to leave something to the church for a building campaign or other particular purpose.
  • One of the spouses passed away after a bitter struggle with prostate cancer, heart disease, Parkinson’s or some other chronic or critical illness. The surviving spouse wants to leave something to a research organization that is searching for care and cure methods for their lost spouse’s prior illness.
  • The client had been a long-time listener of public radio and wishes to support their local public radio station.
  • He spends much of their retirement years enjoying the collections at their home cultural district, particularly the art museum. He decides that he wants to leave a gift to ensure that other people have the same opportunity to access rich and beautiful works of art as he did.
  • She taught elementary school for 40 years and for much her career was a literacy specialist. Towards the end of her career she began to see a distinct deficit in the reading capabilities of her students. As a part of continuing her passion for literacy long after her life ends, she wishes to commit to a one-time gift to a local literacy support foundation.

Maybe you resonate with some of these examples or maybe something else comes to mind as you read this. Regardless of which is your situation, planned giving may be a smart legacy planning strategy for you. Should you wish to consider this kind of plan, a few steps to consider:

  1. Consult your financial plan. Before you make any decisions about what kind of planned gift you want to put into your estate plan, you should understand the journey your assets will take through retirement. Ask your advisor which assets will be spent down first and in what way. Given certain spending assumptions, your advisor should be able to project at various points which assets will be more likely to have larger balances than others. You can use this as a gauge for which assets may be a better for the gift you wish to make.
  2. Consider your life insurance options. Permanent forms of life insurance like whole and/or universal life can be a powerful legacy planning tool. In certain situations, you may find that by using an existing asset to fund a life insurance you may find that you can double or triple the impact of your gift.
  3. Meet with an estate attorney. There are a variety of ways to structure planned giving, particularly gifts of a larger size. It’s important your estate attorney and your financial advisor work together to help you find the right structure for you. There may be ways to make a gift in ways that more tax efficient for your now rather than simply considering the taxable effects upon your eventual estate.
  4. Communicate your gift to the beneficiary. Planned giving can be a substantial part of the budget and cash flow planning of many large non-profit organizations. By communicating with them in advance you do them the favor, of (1) being able to thank you and recognize your contribution while you are still living and (2) consider where—if anywhere—they should be conscious of the impact of your gift on future planning or fundraising.
  5. Communicate your gift to your family. We have seen too many situations where a generous patriarch or matriarch has made a plan to pass on large portions of their wealth to charity and never communicate it to their children. While you may have your own personal reasons for doing this, we generally encourage or clients to keep the lines of communication open. While you would never want your children to be “counting on” their inheritance, the fact is that most of the time the knowledge of a future inheritance affects planning of the eventual beneficiary. For this reason, if you intend to exclude some portion of your estate from being passed on to your family, it can be best practices to let them know so as to avoid the uncomfortable surprise of finding out the day they open the will.

While planned giving is not for everyone, when structured correctly it can be a way for individuals and families to help their values carry on long past their lifetimes. By taking these steps seriously and engaging the correct tools and professionals, you may find you have more to give than you realized.

Advisory services provided by TrilogyCapital, Inc,. a Registered Investment Adviser. Separate advisory and securities services may be provided by National Planning Corporation (NPC), a SEC Registered Investment Adviser and broker-dealer. Member FINRA and SIPC. Certain registered representative with NPC are doing business under the name of Trilogy Financial. TrilogyCapital, Inc. and Trilogy Financial are affiliated by common ownership and are separate and unrelated to NPC. Please consult with your representative to confirm, on which company’s behalf services are being provided.