Estate Planning & Planned Charitable Giving from a Christian Perspective
The Need is Big
There is a tremendous lack of knowledge in the Body of Christ among church leaders, church members, and church-related organizations, with respect to estate planning, and the impact it has on families, churches, Christian organizations, and the expansion of God’s Kingdom. Given the present lack of knowledge, along with current trends, a tremendous challenge exists for those in the estate planning field.
The World War II Generation is Passing Away
The World War II generation is passing away. This generation has been the biggest savers. Experts estimate that some $12-$14 Trillion will pass from the WWII generation to the Baby Boomer generation over the next 10-20 years. There will be three primary beneficiaries of the estimated $12-$14 Trillion over the next 10-20 years. The three beneficiaries will be the U.S. Government, heirs, and charitable organizations.
Beneficiary #1: The U.S. Government
Under current trends, the single largest beneficiary will be everyone’s relative, Uncle Sam. When wealth is passed from one generation to the next, taxes are a major factor. Without proper planning, taxes will consume a large share, if not the lion share, of this wealth. In fact, up to 76% of an American citizen’s retirement plan assets can be lost to taxes 1. So, without proper planning, heirs may lose out on the bulk of inheritance due to taxes alone. This leaves less money for heirs and ultimately less money for charitable organizations. With education, however, people can learn how to reduce or eliminate most of the estate taxes and/or income taxes that would otherwise consume up to 76% of their wealth.
Beneficiary #2: Heirs
Of the money that does end up in the hands of heirs, the issue becomes their ability to manage it well. Most unfortunately do not. One sobering statistic is that 70% of all wealth transfers in America are doomed to failure in that the heirs involuntarily will lose control of the inheritance left them 2. Research by authors Roy Williams and Vic Preisser, led them to conclude that the problem of maintaining inheritances was not the lack of proper financial and legal advice available for parents, but “the values and practices of heirs themselves. In other words, the children [heirs] lacked the values and skills to manage their inherited wealth wisely.” They saw that “unsuccessful transfers usually lacked a clearly developed plan or family mission statement.” This makes the need for education and solid planning all the more important. Without it, up to 70% of the wealth passing from the WWII generation to the Baby Boomer generation and younger generations will be lost forever. Wise estate planning measures can help prevent this from happening.
Beneficiary #3: Charitable Organizations
Under current trends, the lion share of inheritances will go to taxes, most of the remaining inheritances will be spent by heirs, and only a fraction will go to charitable organizations. According to a Prudential study, only 8% of American wills contain any charitable giving whatsoever.3 So under current trends there is only a fraction designated for charitable organizations to begin with. Organizations that depend on the support of those 55 years old and up, will likely be financially crippled as older donors pass away. The need to educate donors now before they pass away is vital to operational efficiency of many worthwhile charitable organizations. When potential donors learn how charitable giving strategies can benefit their favorite charitable organizations without negatively impacting their families, they are much more likely to leave part of their estates to charities. Studies indicate that 30% of those who have estate plans would consider making a bequest to charity if asked to do so. 4 Studies also show that up to 70% of donors who make planned gifts to charities, did so simply because they were asked. So people are willing to give to charity, and large percentages of donors do give to charity, after being asked. Additionally, nearly 60% of donors to charity indicated they would give more money if they were able to determine the impact of their gifts. 4 Again, education makes all of this possible. Through education, significantly more donations will ultimately be made to charitable organizations and positively impact the Lord’s work.
As Christians are educated in solid estate planning, wealth transfer concepts, and charitable giving strategies, they are able to make better decisions that will minimize taxes on themselves and their families, they are able to make better decisions that will ensure inheritances are better managed throughout their heirs’ lifetimes, and they are able to pass significant donations to their local churches and other charitable organizations close to their hearts. Instead of most of their wealth being lost forever, families are able to minimize taxes, create a legacy of wealth for heirs, and create substantial gifts to charitable organizations.
Our mission is big because the need is big. By educating and helping more people, we will ultimately help many families, charitable organizations, and the expansion of God’s Kingdom.
1 Scott Keffer, “The Top Ten Wealth Transfer Mistakes”, Physicians News Digest, April 1999
2 Roy Williams and Vic Preisser, Preparing Heirs: Five Steps to a Successful Transition of Family Wealth and Values (San Francisco: Robert D. Reed Publishers, 2003), p15-17
3 Ron Blue, Generous Living: Finding Contentment through Giving, speech delivered at the annual Generous Giving Conference, Atlanta, Ga., January 14-15, 1999
4 Survey of donors in 2000 by The National Committee on Planned Giving; Bequest Donors: Demographics and Motivations of Potential and Actual Donors, The Center on Philanthropy at Indiana University (Indianapolis, 2007); Bank of America Study of High Net Worth Philanthropy, Center of Philanthropy at Indiana University (Indianapolis, 2006)