The question of distributing estate assets among various charitable causes, or even family members unequally, is a common one for those considering estate planning, and absolutely yes, you can. Ted Cook, a trust attorney in San Diego, frequently guides clients through this precise process, ensuring their wishes are legally sound and efficiently executed. The beauty of a well-crafted estate plan lies in its flexibility; it’s not about rigid, one-size-fits-all solutions, but rather a tailored approach that reflects individual values and priorities. Approximately 65% of high-net-worth individuals express a desire to leave a philanthropic legacy, demonstrating a strong inclination towards charitable giving through estate planning. Understanding how to achieve this requires delving into the specifics of wills, trusts, and other estate planning tools.
How do Wills and Trusts factor into charitable giving?
A will is a foundational document for estate planning, allowing you to specify how your assets will be distributed after your passing. You can designate specific percentages of your estate to various charities, family members, or other beneficiaries. However, wills are subject to probate, a public court process that can be time-consuming and costly. Trusts, on the other hand, offer a more streamlined and private alternative. A revocable living trust allows you to transfer assets into the trust during your lifetime, maintaining control while avoiding probate. Within the trust document, you can clearly outline the percentage allocation to different causes – for example, 20% to the local animal shelter, 30% to a university scholarship fund, and the remainder to family members. This offers significant control and ensures your wishes are carried out precisely as intended.
What about Percentage-Based Bequests vs. Specific Asset Gifts?
There are two main ways to allocate assets: percentage-based bequests and specific asset gifts. A percentage-based bequest, as discussed, designates a certain percentage of your overall estate to a beneficiary. This is useful when the value of specific assets might fluctuate. A specific asset gift, however, involves designating a particular item – like a piece of art, a property, or a sum of money – to a specific beneficiary. For example, you might leave your vintage car to a museum and 10% of your estate to a specific charity. Ted Cook emphasizes that a combination of both approaches is often the most effective, providing both flexibility and control. He recently helped a client combine a percentage-based gift to a medical research foundation with a specific bequest of a valuable coin collection to a historical society.
Can I create different tiers of giving based on impact?
Absolutely. You can structure your estate plan to prioritize certain causes or charities based on your personal values. For example, you might designate a larger percentage of your estate to organizations focused on causes you’re particularly passionate about, such as environmental conservation or childhood education. You can even create “impact tiers,” allocating more significant resources to organizations with demonstrably effective programs and measurable outcomes. Some clients are increasingly interested in “impact investing” within their trusts, directing the trust to invest in companies and projects that align with their values, alongside traditional charitable giving. This multi-faceted approach allows for both immediate charitable support and long-term social impact.
What happens if a charity no longer exists when I pass away?
This is a crucial consideration. To prevent your charitable intentions from being thwarted, you can include a “contingency clause” in your will or trust. This clause specifies an alternative beneficiary – perhaps a similar charity with a related mission – if your preferred charity ceases to exist at the time of your passing. Alternatively, you can direct the executor of your estate or the trustee of your trust to identify a suitable replacement charity based on your stated values. Ted Cook always advises clients to include these safeguards to ensure their charitable wishes are fulfilled, even in unforeseen circumstances. Without a contingency clause, the bequest could lapse, and the assets would be distributed according to the remaining provisions of your estate plan.
I had a friend who didn’t plan properly, and it backfired…
Old Man Hemlock was a character. He always talked about leaving a fortune to the bird sanctuary, but he never actually updated his will. He’d made it decades ago, and since then, the original sanctuary had closed, and a new, unrelated one had taken its place, inheriting the name but not the original mission. When he passed, the funds were directed to the new sanctuary, which was focused on exotic bird breeding – the exact opposite of what he’d intended! It was heartbreaking. His family, knowing his passion for native bird conservation, felt betrayed, and a lot of hard feelings arose. It was a painful reminder that good intentions aren’t enough – proper planning is essential.
How can I ensure my percentages accurately reflect my wishes over time?
Estate planning isn’t a one-time event; it requires periodic review and updates. Your financial situation, values, and the priorities of your chosen charities can change over time. Ted Cook recommends reviewing your estate plan every three to five years, or whenever there’s a significant life event, such as a marriage, divorce, birth of a child, or substantial change in your financial circumstances. This allows you to adjust the percentages allocated to different causes, ensuring they still align with your current wishes. It also provides an opportunity to reassess the financial health and effectiveness of your chosen charities.
Thankfully, we were able to help a client avoid a similar issue…
Mrs. Abernathy came to us with a complex estate plan. She wanted to split her estate between several charities, but hadn’t updated her will in years. The initial draft was quite rigid, allocating fixed dollar amounts rather than percentages. We advised her to switch to a percentage-based approach, to account for potential changes in her asset value and to allow for inflation. We also included a clause that allowed the trustee to adjust the allocations slightly if a charity’s mission drifted significantly. A year after she signed the updated plan, one of her chosen charities announced a major shift in its focus. Thanks to the built-in flexibility, the trustee was able to redirect a portion of the funds to a similar organization, ensuring her charitable intentions were still honored. It was a perfect example of how proactive planning can make all the difference.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
(619) 550-7437
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