Updated March 29 at 5:29pm

When leaving a legacy gift, consider the options

Companies and others looking to make charitable contributions typically don’t need help finding nonprofits and others in need.

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When leaving a legacy gift, consider the options


Companies and others looking to make charitable contributions typically don’t need help finding nonprofits and others in need.

Where they often do need help, however, is guidance on ways to strategically contribute and in many cases, leave a legacy, say professional advisers.

“If the client is charitably inclined, they need to have their gifts aligned with the mission of the organization they are considering,” said attorney James Aukerman, of James V. Aukerman & Associates in South Kingstown.

Is it meeting the need that the client recognizes? Then, drill down to be sure that the organization is spending the most on its direct support of mission versus administrative and fundraising overhead, said Aukerman.

More advisers are incorporating philanthropy as an integral part of their financial and estate planning. Charitable-giving advice is typically used by “generally older people with accumulated wealth,” said attorney Paul Silver of Hinckley, Allen & Snyder in Providence. Yet that doesn’t rule out the young entrepreneurs who, in addition to capital, tend to donate time as well.

Community foundations such as the Rhode Island Foundation, one of the oldest of its kind in the country, are being incorporated by advisers as trusted resources in delivering charitable-giving advise to their clients. Community foundations are nonprofit, public corporations organized to be a catalyst and resource for philanthropy.

From simple forms of cash giving to more sophisticated charitable techniques, both Aukerman and Silver aid their clients in navigating the advantageous vs. less advantageous channels of donation. Silver is quick to point out that “taxes are not the major driver” of giving. Until tax breaks are at 100 percent it still costs to give, and most contribute to nonprofits because “they have an interest in the cause,” he said.

Experts advise to align your lifetime giving to your legacy giving. That means that if you donated much of your time and money to a favored alma mater or local hospital, where you’ve gotten to know staff and leaders, you may want to reflect that in your estate plan. This will contribute to the organization’s sustainability as well as link the donor’s legacy “footprint” to the organization with which the giver so strongly identified.

“Many people ask, ‘Does it make more sense to give while I’m alive or after death’” said Silver.

The answer is to give while alive if you’re able to because from a tax point of view it’s more beneficial. However, they warn that while you will benefit from tax breaks, you’re still giving some away and must determine if you need that to survive.

Several options exist for those considering setting up their long-term legacy giving:

• Bequests. A charitable bequest can be a specific dollar amount, a percentage of your estate, or what remains. Or, your will or trust can specify that your heirs receive lifetime income from your estate, with the remainder going to a charity. The bequest can also funnel into a donor-advised fund for your children to carry on your family’s philanthropy.

••Retirement fund assets: Heavily taxed, these assets offer an opportunity to avoid income and estate tax while giving a significant gift.

• Charitable remainder trusts. Donors with appreciated assets such as real estate or securities fall under this category. They allow you to receive income (or provide income for another person) with the knowledge that the funds remaining when the trust ends will be used to support charitable interests.

• Legacy land planning. This is an option for those who want to preserve their legacy by preserving their property through open space or for future specified use. This may involve town officials, nonprofit charity and land trust.

• Charitable gift annuities. This guarantees you or someone you name a certain fixed income for life.

• Life insurance. A policy can be used as a charitable asset, in so doing enabling you to be eligible for a charitable tax deduction based on the current value of the paid-up policy. •


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