I have heard the phrase “Planned Giving,” but I am not really sure I know what it means. What is planned giving?
Planned giving is commonly understood to mean planning for the distribution of your estate at death to provide for, among other distributions, a gift to a charitable organization(s). Many people consider leaving a gift to a favorite charity as part of their estate plan, but they do not take the time to formalize their wishes. By not taking the time to insure that their gift will be honored, the gift is often overlooked or omitted from their estate plan. This can be avoided with good estate planning that includes a documented planned gift.
Can I include both my family and Bemidji State University in my planned giving?
Yes, you can. Many people mistakenly believe that one’s estate must pass exclusively to their surviving family members or, alternatively, exclusively to a charity. But it is quite simple to provide for both in your estate planning, and often by doing so you can nurture the spirit of philanthropy in your family that will hopefully be passed from generation to generation. Additionally, planned giving can often reduce or eliminate estate tax that may be due upon your death. The planned giving officer at BSU can help identify strategies that you might consider that could be of benefit.
What happens if I make a planned gift with certain of my assets, but then I need those assets while I am living?
Most planned gifts are revocable meaning you can change your mind and the gift can be undone or revoked. No one really knows what the future holds, and one benefit of making a planned gift is that the gift is not actually distributed until after your death. Therefore, if you need the assets while you are living, they are available for your use.
Can I change my mind about a planned gift?
Yes, as mentioned above, most planned gifts are considered revocable meaning you can change your mind. Some planned gifts strategies involve gifts that are irrevocable and cannot be reversed once they are established. There are many different types of planned giving options; knowing which option will work best for you is critical.
Won’t my kids be mad at me if I make a planned gift to Bemidji State University?
Generally, children will honor the wishes of their parents, especially if they know that the intended charitable organization has been important to a parent during his/her life. The media sometimes feature the stories of disgruntled adult children who are not happy with their inheritance. Most estates, though, are not contested, and there is no fighting among family members.
Most estates are handled in an organized, orderly fashion, especially when good estate planning was put into place before death. Some people who make a planned gift like to share their plans with their children; that way, the children are not surprised to learn of the charitable gift after a parent’s death.
My estate planning is already complete; will I have to pay a lawyer to help me again if I want to make a planned gift to BSU?
You might, depending on how your estate is structured. You may first want to discuss your ideas with the planned giving officer at BSU. Each estate is different and may require the services of a lawyer to make changes, while others may be changed by simply updating beneficiary designations. The planned giving officer from BSU can help you understand what is necessary to change your current estate plan to make a gift to BSU.
Why should I make a planned gift to BSU; don’t my tax dollars go to support Bemidji State University?
Bemidji State University, like all public universities, has seen its government support dramatically decrease over the past few decades from 70% to less than 30%. Moreover, over 60% of BSU undergraduate students have some level of financial need. BSU is currently undertaking an ambitious fundraising campaign called Imagine Tomorrow. The aim of the campaign is to allow BSU to increase scholarship support for students as well as provide the resources necessary to enrich and enhance the learning environment at Bemidji State University. In essence, the goal is to keep BSU a thriving institution of higher learning in a time of diminishing state support.
Is there a tax benefit to making a planned gift?
There very well could be. Depending on how your planned gift is structured, there could be both a reduction in income tax for your beneficiaries as well as estate tax savings from making a planned gift in your estate plans.
What kinds of assets are best used in making a planned gift?
Since planned gifts mature upon death, it is important to consider what type of assets may make the best planned gifts. For example, if you have an asset such as an IRA or 401K that will be distributed to a named beneficiary (like a family member) and that beneficiary will need to pay income tax on their distribution, you may want to consider passing that asset to a charity and leaving a different asset to your beneficiary that can be distributed tax free. Another asset that makes for a good planned gift is real estate. People often think that upon their death a piece of real estate will be quickly sold, but we all know that real estate does not sell overnight. Leaving your family to care for a home or cabin can often be far more of a headache than benefit, especially if family is not in the area. Additionally, the upkeep, property taxes and other costs associated with real property can add up quickly and drain resources that were intended to pass to family. For these reasons, and others making a gift of real estate to BSU at your death can be a very wise decision.
I would like to hear more about planned giving to BSU, who do I contact?
That is an easy question---my contact information is below, and I would welcome the opportunity to talk with you. We could meet for coffee or lunch, or if you would prefer I can visit you in your home to discuss your ideas about planned giving and the meaningful way you can leave a legacy to Bemidji State University.
Kathleen M. McKinstra
Planned Giving-Bemidji State University Foundation
Telephone: 218-755-4039 or toll free (888)234-5718
The information contained herein should not be construed as legal advice. For questions regarding legal, financial, tax, and similar matters a qualified professional advisor should be consulted.