Will the Wealth Transfer Bus Leave Without You?
Submitted by American Endowment Foundation on January 24th, 2022By Eric Kinaitis, Editor
A recent article in Wealth Management by noted expert Robert F. Sharpe Jr. highlights the increasing pace of wealth transferring to charitable causes. Data shows from 2000-2020, over $555 billion was transferred to charity via bequests and other testamentary means. However, nearly 72% of that growth occurred from 2014-2020. This highlights an increased pace of testamentary giving that will likely continue until mid-century.
A key takeaway from the article is that over 6 million persons age 55+ specifically plan to leave money to charity through their estate plans. As an advisor, how many of your clients fit this criteria?
Although the research shows that nearly 80% of charitable bequests occur from persons who pass away over the age of 80, a key recognition is the planning for that bequest needs to occur today, not later.
Due to their age, one of the audiences that deserves the most attention are Baby Boomers. The oldest Boomers today are 75, and Baby Boomers as a generation are twice as likely as preceding generations to be childless. Where will their assets go? A trend that has been witnessed is that childless Boomers “adopt” specific charities that are important to them. These relationships achieve a level of importance that is nearly familial in nature; the bond between the person and the cause becomes that important.
Couple this factor with a reduction in federal estate taxes that greatly limit the number of persons that may be affected by estate taxes and you have clients that are more likely to need a better defined plan to incorporate their charitable wishes and their retirement needs.
For these persons, Sharpe Jr. sees the value to “ plan their charitable gifts in ways that allow them to enjoy greater tax benefits while they’re living.”
Testamentary tools such as charitable remainder trusts (CRTS) and charitable lead trusts (CLTs) can provide means that can increase income while reducing the impact of income and capital gains taxes. Couple these tools with a donor advised fund (DAF), and an advisor can provide a plan that allows their clients to engage in the charitable giving that is important to them.
At American Endowment Foundation, we look forward to helping donors and advisors determine the best strategies for their charitable giving. Please contact us or call at 1-888-966-8170 with any questions.